Question Regarding "Partial" Refinance

[andyaycw]

I have heard of some individuals being able to "split" the refinancing on their mortgage loan to stay within Fannie Mae Conventional loan limits. E.g. if the balance on a first mortgage is $500,000 with no second mortgage or HELOC, and the property is in California, is it possible to refinance $417,000 to get Conforming rates (as opposed to High Balance rates) and then the remaining $83,000 under a different program, like an ARM? Has anyone heard of this and what is the right terminology for this? I always thought that under these circumstances, it would have to be an all-or-nothing type of deal, where the entire $500,000 balance would need to be refinanced under the same program.

[ShanetheMortgageMan]

It's called a piggy-back mortgage, very popular before the real estate bubble bursts and you can still get them today, but a few months ago I called over a dozen banks for a client of mine, and found out unless you have a ton of equity (20-40% depending on the lender) you aren't going to have any 2nd mortgage options here in California.  I suspect it won't be long until there will start to be some 2nd mortgage lenders willing to go to 85-90% of a home's value.

So if you have the required equity, then you could potentially refinance your 1st mortage at $417k and the remaining on a 2nd mortgage up to 80% of the home's value.