Does it make sense to refinance? (loan officer, interest rate, real estate, approve)

[stant_98]

Hello,

I live in a condo in Maryland. The condo's market value approximately at 168K.

Got 2 mortgages. First mortgage:

5-yr ARM (5.125%) originated in 2005 for 200K (based on 1-yr LIBOR 2.25 margin 2% yearly cap).
This mortgage adjusted down in June 2010 from 5.125% to 3.125%
Owe 178K.

2. Second mortgage - owe $7800. > no problem subordinating

I know that I qualify for HARP (Fannie Mae is the investor on 1st mortgage).

Contacted my mortgage holder refinance loan officer. He said they will be able to approve to loan 176K (105% LTV) quoted 5.3% (no points) 30-yr fixed with $3000 maximum out of pocket at closing.

It's possible my property value will decrease somewhat more in 2011. And I know HARP is going to expire in 2011.

Does it make sense for me to refinance? Am I not going to benefit from the refinance? (going from 3.125% to 5.3%).

[VictorBurek]

It depends on how long you plan to keep this property. If you are keeping this property for 3 or less years, definitely dont refinance. If you are keeping this property for a longer period, you might want to consider it.

[chet everett]

I have some very serious concerns about anyone that owns or is considering a condo / townhouse because so many are not going to be sellable / financeable under current FHA rules. Frankly that is my biggest real estate fear for the next few years...

With that in mind, if the refi makes the place more sellable (or even less hard for you to take a loss on...) I would let that drive my decision, thoughthat would be less important if you need / want to sell / move in a time frame of say greater than 7 years or so (and as I have also said before, it is not that I think something will really be looking up in 2018' just that he uncertainty of how things could shift after inevitable political changes in 2016 will ace a huge impact on many economic policies...).

Finally I would like to give a little praise to someone that is at least thinking about honoring their commitment to pay off their obligations even though they know they are currently underwater. If more people had respect for the impact such decisions make on the overall economy maybe things will continue ro improve...

[mortimer]

Originally Posted by chet everett

... give a little praise to someone that is at least thinking about
honoring their commitment to pay off their obligations even
though they know they are currently underwater. If more people ....

If more people who are currently underwater could get their place
refinanced like the OP, much less of them would be walking away.

From what I've been reading, people are not just waking up one
day and saying " I think I'll walk away ... "

People are getting turned down over and over from being able to
refinance their 7.5 and 8.5 etc. mortgages into the current rates.

When everyone who is current on their mortgage can get the
going rate ...

Originally Posted by chet everett

... the overall economy maybe things will ... improve...

[Lacerta]

Originally Posted by chet everett

I have some very serious concerns about anyone that owns or is considering a condo / townhouse because so many are not going to be sellable / financeable under current FHA rules. Frankly that is my biggest real estate fear for the next few years...

Ok, as the owner and occupant of a townhouse that I love, you just sent me into panic mode, since I hadn't read anything about this. After some quick research, it appears to me that the new rules affect only actual condos, whether they are built townhouse style or apartment style. My property is a townhouse style single family, and as such, as far as I can tell, is NOT included in the new FHA rules. Could you confirm if that is what you understand as well? Thanks

To the OP, sorry about the hijack. I agree with Victor. If you are going to stay for more than a couple of years, refinancing may make sense. I don't think the LIBOR rates are going to change quickly over the next few years. On the other hand, they have pretty much nowhere to go but up. So if you are planning to stay longer than 2 or 3 years, I would probably take this opportunity to lock in at a good rate. If not, and you are planning to move sooner, I would keep the current low interest rate, and not incur the cost of a refi.