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I currently have an 80/20 loan with two banks for 5 years now. The house was 150k and i now owe 140k. I feel that i'm paying way to much in interest each month and have already been approved for a lower interest rate at 4.875 for 30 year FHA. Now i'll have to pay PMI but i'll still be saving roughly $150 a month by refi. I'm worried that my house won't appraise at what i bought it at. they houses around me are selling for around 147-155. Would it be wise to refi if my house is appraised lower than i paid? I don't plan on living there for more than 5 more years so my thinking is that at the current moment the $150 more a month would be great and hopefully in 2-5 years the market will come back and i can make more off of it. Of course that's what i thought when i first bought it!!
Thanks for the reply. In order to get the loan the Loan to value must be 96.5 which puts the appraisal at 151 otherwise i will have to pay put of pocket on the loan at closing. Still think I should if I have to pay out of pocket even if its 4k?
Thanks for the reply. In order to get the loan the Loan to value must be 96.5 which puts the appraisal at 151 otherwise i will have to pay put of pocket on the loan at closing. Still think I should if I have to pay out of pocket even if its 4k?
It all depends on how much it will cost you to get this new loan (including any amount that you are rolling into the new loan). You have provide a few variables and one of the important one is that you don't plan to stay more than 5 years. Can recoupe the cost of refi. within 60 months? Then ask yourself how likely you would move in 4 years?, 3 years, etcs..
Your going to move in 2-5 years and the time to recoup fees is 3 years- there is no way I recommend this loan. I use a 150% rule- if you can't say beyond a shadow of a doubt that if things remmain in your control that you will be in the home for 150% of the recoup time you don't do it. Life has curveballs like job transfer, family illness etc but if you know its at best a break even forget it with this closing cost structure.
What you need to look at is restructuring the rate/ fees. As about a slightly higher rate in exchange for lower fees and see if it makes sense. Ideally you would get to a full no closing cost for about .25-.375% higher which would still have monthly savings without fees. NC has very low 3rd party fees so we can do this, but don't know about your local area.
When I read your post, a cartoon immediately came to mind. It's the one where it shows how the homeowner sees his own home. It then shows what the Realtor thinks of the home, showing a slightly smaller home. But this is followed by the appraiser's view of the home, a little more than a box. Finally, the same home is shown how the tax assessor sees the home and it's a palace. My point is we don't always have the same view.
At first when I read your post, I wanted to ask why did you think you were exempt from the declining values the rest of the country has been experiencing. However, there are pockets that are actually seeing appreciation and to question it, sounded too much like a smart a**. So, I pulled your zip code listed in your profile (30265) and found this: "The median sales price for homes in Newnan GA for Dec 09 to Feb 10 was $136,015. This represents an increase of 0.8%, or $1,144, compared to the prior quarter and an increase of 5.8% compared to the prior year. Sales prices have depreciated 17.8% over the last 5 years in Newnan."
So, this means you are starting to see values recover, and slowly.....but enough to get 151K as an appraised value? I'm not optimistic, but I am also not an appraiser or a Realtor. I seriously doubt any of the appraisers are going to weigh in here and most Realtors will refer you back to someone in your area for data. Appraisals in my area run $450 for an FHA loan. You don't have to go through with the refi if the appraisal is low......But, how do you feel about losing $450?
I would contact the Realtor that helped you buy the place and ask him/her to check comps to see if they believe it would appraise. Their opinion isn't a guarantee, but it's closer than what anyone else here can advise you.
(The question of it being worthwhile is completely another question).
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