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I'm upside down on my mortagage..should i even try to refinance?
Old 09-29-2011, 06:17 PM   #1
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I'm upside down on my mortagage..should i even try to refinance?

It seems i'm the only person i know that can't refinance my mortgage and now the rate is 2 points lower than the one i have. According to my town's assessment and my mortgage i'm upside down a whopping $63,000..but according to zillow i'm only down a whopping $45,000. We just totally renovated one our bathrooms and kitchen with stainless steel and all the toys. Do you think those two renovations make it "possible" for me to refinance my home? I'm expecting no..but you never know. I can' t use the Obama program because we are not having financial difficulties and my mortgage isn't owned by fanny mae or freddy mac.
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Old 09-29-2011, 06:38 PM   #2
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Could you pay down your mortgage to where you weren't upside down any more? Then it would be easier to refinance. I guess this was something to think about before doing the remodeling.
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Old 09-29-2011, 06:41 PM   #3
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We did the remodels ourselves so we saved a ton of money, but i don't have 60,000 hanging around. guess i'll have to do an appraisal and see how much it went up. Unfortunately, i don't think it will be enough though..
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Old 09-29-2011, 06:44 PM   #4
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Depending on how the appraisal comes in based on the renovations, you may not need $60k.
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Old 09-29-2011, 06:59 PM   #5
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As I recall, appraisals do not take into consideration the improvements you make inside. We renovated the entire inside of our house after purchase but I'll bet the appraisal hasn't changed one dime. No property appraiser better come inside my house and recalculate.
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Old 09-29-2011, 07:03 PM   #6
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No property appraiser better come inside my house and recalculate.
We aren't talking about a tax appraisal...
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Old 09-29-2011, 07:19 PM   #7
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Call some banks, mortgage companies, credit unions, and ask them.

A friend of mine doesn't want to go through an appraisal to refinance because she also has a home equity line of credit that she is afraid would be lowered if/when a new appraisal shows a much lower value for the property.
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Old 09-29-2011, 08:53 PM   #8
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That 2% could be a big deal over the life of your loan, assuming you're planning to stay put for a long time. I'd ask around for a trust worthy mortgage broker and see if they can find you a pairing of loans - one for 80% of the appraised value at a good rate plus one for the remainder of the current debt obligation at a higher rate.

Alternatively, maybe you could borrow against your 401k to get the money needed to push your loan down to 80% of the appraised value?

It definitely seems worth pursuing to me.
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Old 09-30-2011, 07:19 AM   #9
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I agree with visiting your small local banks and cu. Have all your paper work in order, tax returns, copies of assets? Mutual funds, stocks,bonds, etc.

My small local bank actually called ME at home two days ago!
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Old 09-30-2011, 07:29 AM   #10
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check with the bank that you're at whether they will consider a modification of your current loan. I've been able to do so twice so far with Citi, they only thing required was a payment of $475 ($350 first time) and confirmation of income. Since they already own the risk, there isn't any point in them re-appraising, and it prevents me from refinancing elsewhere. LTV never comes into it, since they are actually reducing their risk, as they cash the payment, and the lower monthly going forward is less likely to be defaulted on.
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Old 09-30-2011, 07:41 AM   #11
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check with the bank that you're at whether they will consider a modification of your current loan. I've been able to do so twice so far with Citi, they only thing required was a payment of $475 ($350 first time) and confirmation of income. Since they already own the risk, there isn't any point in them re-appraising, and it prevents me from refinancing elsewhere. LTV never comes into it, since they are actually reducing their risk, as they cash the payment, and the lower monthly going forward is less likely to be defaulted on.
I'll echo Seabourne. Call your current mortgage holder and ask about "recasting" your mortgage. usually a modest fee (350-500) and other than a lower interest rate/payment nothing else changes. A generally quick and painless process.
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Old 09-30-2011, 09:50 AM   #12
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How much did you put down when you bought

If you put down 20% then you are probably not paying PMI... if you refinance and only pay down so you are not under water, you will be paying PMI...

IOW, under water $60K only gets you back to 100% of the value... you still would need to come up with another 20% of the value to be at 80% for your mortgage... not something that I see happening from what you post...


Let me put some fake numbers to show what I mean....


Say you owe $560,000.... the house is worth $500,000... IMO it would be hard to get a loan for more than $400,000... $400K/$500K = 80%....

That means $160,000 sitting around to refinance...
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Old 09-30-2011, 12:20 PM   #13
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The town assessment is probably a little low (to deter abatements) and Zillows is high (they use lagging data ... therefore always behind the trend).

I'ld say you're stuck unless you can buy it down. Maybe a loan from your 401k?

Or say F-it and walk away (not what I would do). It'll be many, many years before you're right side up again.

FWIW I carried several properties upside down for 12 years in the early 1990's. Then sold and wrote a small check at the closing.
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Old 09-30-2011, 12:21 PM   #14
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d00042, we're in the same situation - high interest rates on our mortgages, owe more than it would likely appraise for, and don't want to abandon or sell it. I called both lenders, my independent mortgage broker, a big bank I have an account with, and a local credit union I have an account with. The basic answer was the same - until we either had 20% equity or went into default or lost our income and assets, we would not be eligible for any programs. The only exception one bank mentioned is that if our loans happened to be backed by Fannie Mae - which ours aren't. Really, if I look at it from the lender's point of view - why would they want to give me a lower rate? This is what I agreed to pay and they don't see any likely hood of me defaulting, and they know I can't switch to a different lender due to not having 20% equity. The best bet I've thought of is to overpay the mortgage bills each month until we build up enough equity to refi.
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Old 09-30-2011, 12:38 PM   #15
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Well, if it makes you feel better, you aren't the only one. Although I just refinanced my townhouse (I bought it 12 years ago), my boyfriend can't refinance his condo (which he rents out, since we live together), because it is VERY underwater. He's just holding on to it, hoping it goes up in value some day!
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Old 09-30-2011, 12:49 PM   #16
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My parents tried to refi but, since they're underwater, couldn't do it unless they came with cash. However, not worth it to throw cash on real estate "asset".
I bought a house with 5% down while back but had to short sale it due to job loss. My co-worker bought a house with 20% down but can't walk away b/c he's put so much into it.
Even if you have the cash, I wouldn't throw it into your house that might go down in value even more and with unsteady job market, I would want the option of walking away if something happened.
This option probably isn't popular here but it's hard to relate unless you've been in this kind of situation.
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Old 10-01-2011, 08:15 AM   #17
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I am also in the same boat with my mother's house. The mortgage is own by Wellsfargo and they do not have the program that Citi offers to their customers. I am going to keep the house until my mother moves to mexico, and I want to have the option of just walking away. In the mean time, I just hope that at some point Wellsfargo would come with a new program. The loan is own by Fannie.
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Old 10-03-2011, 07:18 AM   #18
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In my reply to this thread I just want to say that I am not judging anyone, especially in these difficult (housing) times.

This board has been very helpful to many as well as being very friendly. Something that most of us here don't take lightly here.

That being said, it is sad to see how many people are just willing to walk away from their house. (My BIL lost almost everything) I fully understand that many have little or no choice. A decade or so, this was rarely heard of. Any thoughts?
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Old 10-03-2011, 09:50 AM   #19
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That being said, it is sad to see how many people are just willing to walk away from their house. (My BIL lost almost everything) I fully understand that many have little or no choice. A decade or so, this was rarely heard of. Any thoughts?
Yes, my thought is -"Does this have anything at all to do with this thread?"

Ha
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Old 10-03-2011, 03:25 PM   #20
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Yes, my thought is -"Does this have anything at all to do with this thread?"

Ha
When has being on topic ever been a requirement for posting on this board?

I doubt many people are "willing" to walk away from their home. Investors, yes, but not average Joes. I think it's more of "I don't see any other option".
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