Financing in Fredericksburg>Question Details

Micbob, Home Owner in Fredericksburg, VA

Live in Fredericksburg VA and struggling with the idea of either refiancing current mortgage or moving. We owe $66890 at 6% on home worth $150000.

Asked by Micbob, Fredericksburg, VA Mon Feb 6, 2012

We would like more living space and have very few options of expanding current home. We would save about $60 a month to refiance but was wondering if new home at todays rates would be better option?

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I forgot to mention I can do a free market analisys for you as well to let you know the most you can get from your home. Just give me a call and we can meet and I will bring all the information with me.

Crystal Kasper
0 votes Thank Flag Link Sun Jul 7, 2013
I think if you need more space and are in the position ( which is sounds you are) to sell your current home and make money off of it to put down on a bigger home now would be the time to do it. The rates are low and the houses are still at affordable pricing. As i can not say that will be the case in a couple months from now as there is going to be a housing shortage here soon. If there is a monthly payment you are trying to stay within all you need to do is speak to a lender and let them know what you are trying to accomplish and how much you want to spend per month and the year term and they can help you with that part of it. I think if you are considering the option to sell and move up now is a perfect time.
Please give me a call anytime I am available 24/7, if you would like me to go over in detail and maybe we can sit and meet and go over some options and I can even call in our lender to help you out and we can have one meeting to help accomplish your goal.
I look forward to hearing from you and have a wonderful day.
Crystal Kasper, Realtor
0 votes Thank Flag Link Sun Jul 7, 2013
Thank you for all your feedback. No, we are not in financial hardship and would look to get the most for our existing home. If we moved we would want to stay with our existing payoff track which is 15 years.
0 votes Thank Flag Link Mon Feb 6, 2012
Difficult to say without knowing more.

My initial gut reaction is that if you want/need more living space, can't get it where you are, and would only save $60 a month in refinancing, then you'd be better off moving. But, as I say, that's just my initial reaction.

Chris offers an interesting scenario. You'd just want to make sure that you did maintain a positive cash flow on your initial property. Prior to the real estate bubble bursting, lots of investors followed a path similar to his suggestion. However, they overextended themselves, found out that they didn't have that positive cash flow, and then lost most or all of their properties. Work the numbers closely. If you're careful, that could be the way to go.

Don't consider a short sale, as someone here suggests. First, you aren't indicating that you have any sort of financial hardship. Second, you have tons of equity. Why would you even want to consider selling your home for less than you owe . . . less than $66,890? (Not saying that you do, of course.) That'd be absolutely crazy. If that were your situation, I know plenty of investors who'd be willing to pay you roughly $80,000 all cash. But you'd be far better off selling for $150,000, or anywhere close to that.

Hope that helps.
0 votes Thank Flag Link Mon Feb 6, 2012
Don Tepper, Real Estate Pro in Fairfax, VA
There is a lot to consider but you appear to be in a great position to make whatever move helps you achieve the financial and lifestyle goals you have. You can cut up to 2% off your interest rate and reduce your mortgage payments substantially. Principal and interest on $66,890 is only $319/mo. However, if you have a growing family, need more room, or just want more room, now is definitely the time to do it. We are in the beginning of a housing shortage in the DC metro area so it will get more expensive for you to trade up in both the short term and long term. If you sell, you'll have plenty of money to make a nice downpayment and avoid mortgage insurance premiums.

There is something bigger here for you too. You can refinance to lower your payment and rent the home which will probably generate another $500-800 a month in positive cash flow for you - that is like giving yourself a $6,000 to $10,000 yearly raise. When you refinance, you can take cash out for your downpayment and buy a new home. The positive cash flow from the existing home will cover a large part of the new mortgage. So, the best answer might not be an A or B decision but a A+B decision - do both - refinance, rent the home, and buy a new one. This strategy can be far more financially beneficial too you than trying to make an either or decision. Let one home pay for a new one so you have two assets instead of one.

The other benefit is the tax advantages of owning a rental property. You can save an additional $3,000-$9,000 just in taxes the first year of owning a "home based business" which is what you can have as a landlord. It doesn't require any additional work, its just how you structure your expenses and tax filings.

This is probably the first time something like this has been explained to you so I am happy to meet with you and explain all of your options. Using a strategy like this can easily double your money over the life of the project. If you sell and just buy a new home, you'll just have one home. If you rent and let one home pay for the other - you'll have two homes and monthly cash flow for probably pretty close to the same mortgage payment you have now.

You really should consider this. Please call or email me and we can set up a time to talk so I can explain more details (there aren't many, its actually pretty simple and I do it for many clients) and answer all of your questions so you can weigh the benefits. I'm right here in Fredericksburg.

0 votes Thank Flag Link Mon Feb 6, 2012
Would you qualify for a hardship in order to do a short sale? Are you current on your payments? It is a great time to buy and you may qualify for a short sale. Contact me with more information and we can discuss your options.
0 votes Thank Flag Link Mon Feb 6, 2012
If your desire is to find a larger home, this is an excellent time to do so with the interests rates exceptionally low. You can definitely get more house for the money. According to t he facts you gave us, you have enough equity in your house for a regular sale. (Meaning you do not have to worry about going the short-sale route and getting your bank's approval.) However to be sure, I would have an agent do a market analysis -- check the current value based on recent sales of similar homes in your area. Also, contact a lender to determine what you can qualify for with regards to a mortgage. This will give you a price range to consider when you start looking for another home.

I am a local Real Estate Broker in your area and would help you any way I can. Best of Luck.

Carolyn LIddell
Sun Realty of Fredericksburg
Web Reference:
0 votes Thank Flag Link Mon Feb 6, 2012
I believe so, the newer home at a lower rate will give you more square footage, more confort for you and your family; currenct home however at what you owe on it I would suggest to keep it as a rental as long as you do qualify for both monies that you will be borrowing and the amount you owe on your present home.
I will also suggest to refinance present home at a lower rate. Since you do have my e-mail please e-mail me back will be more than happy to guide you to a loan officer that will help in both your buying process and your refinance.
0 votes Thank Flag Link Mon Feb 6, 2012
To offer appropriate advice we'd need to know more about the current state of your financial condition and family status to determine whether saving $60 a month is more important for you than the need for more space or vice versa. Based on what we know, you have sufficient equity in your present home to put a nice down payment on a larger home but the question is, are you in a position to afford the costs associated with a larger home and would you be comfortable with a larger mortgage and payment than you have presently? To determine your best course of action you should make an appointment with a reputable Realtor to determine the present market value of your current home, find out what you could expect to net from the sale of that home, and determine the approximate price range of the home you would like in the locality you would prefer. Without all this information it will be very difficult for you to make an informed decision.
Web Reference:
0 votes Thank Flag Link Mon Feb 6, 2012
You need to look to see what the current home values are there. FreddyBurg has grown a lot since i left there 10+ years ago, but the problems are the same there as anyplace else. You need to sell to buy something else. What is your homes value now - that is what you need to know. Then you need to find out what a new home will cost. If you can sell yours for $110,000 what can you buy with the money left after you pay off the loan, agent and closing costs? You will need to speak to a local lender to see what you can afford to borrow after you figure out what your home will sell for.
Let me know if you need a Realtor there, I have many old friends in the Fredericksburg area that could help.
0 votes Thank Flag Link Mon Feb 6, 2012
If you don't have enough space in your house, then why would you stay? I guess this would depend on what your current house value is as well. It takes a few years to re-coup the costs of refinancing and if you can sell & buy in the same market your are USUALLY okay.
0 votes Thank Flag Link Mon Feb 6, 2012
You can definitely get more home for the money with today's rates. It is a buyer's market right now!
0 votes Thank Flag Link Mon Feb 6, 2012
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