You need to decide if you are definitely planning on moving in the next couple of years. If the answer is yes, I would say don't refinance. You won't recoup your upfront costs. If you plan to stay a few years or longer, then you should definitely talk to a mortgage lender about your options. This is not a "do it yourself" procedure because of the concerns that you have expressed. Havethe lender lay out your options and then you can make the decision based on real numbers.
Ed Fallon
Lincoln Mortgage
Conshohocken, PA
610-308-9001
efallon@linc-mort.com

Hi JC,

You have NOTHING to lose by calling the folks at Wells Fargo, and exploring what options they might provide for you with a Re-Finance. You DO have a reasonably amount of equity with your downpayment. So, if you have good credit, they may well perhaps give you a 4.75 or 4 7/8 fixed 30, etc.

Wells has consistently provided me the best rates of anyone for all my deals in the last 10 years. Give them a shot. Why merely listen to "don't bother" - then you are stuck with what you have today - call a BANK and then you can make an informed decision based on what you can do and if it makes sense for you.

As others have noted, you may not be able to refinance due to your equity position, and even if you can, it may not make sense if you're moving soon, in that potential savings would be negated when considering your upfront loan fees. Usually it takes a year or two to "break even" on a refinance's cost.

All that being said, you may still have an option....first thing I'd do is check with your existing lender and ask about the possibility of an ENHANCED STREAMLINE REFINANCE which is a refi that doesn't require an appraisal. As long as you've been current on our existing loan, you're in. That would be perfect for you, in that streamline refinances often come without any fees to you. I am doing this right now myself. My house isn't on the market yet, but it will be relatively soon. I wanted a no cost refinance because it makes no sense for me to pay loan fees when I'm not going to be around to enjoy the benefits of my lower interest rate for too long. This refi is at a slightly higher rate than a full-fee mortgage would be, but I'm ok with that. It's still lower than what I was paying (I was at 6.625% and am going to 5.5%).

If the streamline refinance doesn't work out for you, there's one other possibility for refinancing. . Do you know if your loan is owned or guaranteed by FNMA or FHLMC? Call your lender and ask, if you don't know. If yes, you may qualify for that new mortgage refinance program that Obama just unveiled. It allows people who have good pay history to refinance at competitive rates (currently in the low 5s, some even in 4s) even if their equity is no longer there. Here's a government website to read about it - Check it out: http://www.makinghomeaffordable.gov/refinance_eligibility.htm

If you're moving within a year, you'll have to do the math as far as what the closing costs might be, versus the amount you'll save in your monthly payment.

Good luck!

Just looking,
Congratulations on thinking ahead and planning for the long term!
If your loan is a FIXED interest rate then refinancing now makes little sense. You should, however, be able to pay extra on your principle so that you have more flexibility when the time does come to sell. It is usually a good idea to write a seperate check so that the extra payment does actually go to reducing the principle. Contact you mortgage holder for specific details.
Edmund makes a good point about selling while the builder is still building & marketing new homes. I t may be to your advantage to stay where you are a little longer, til the market (Hopefully!:--)) turns up again.
Best wishes as you plan your long term financial strategy

Not sure if you are referring to LF Xing, but if you are, I have a couple of thoughts. Refinancing may not be an option; although your initial deal was relevant for that time, I'm not sure if the ratios and appraisal will be favorable today. Furthermore, you may consider renting out your unit (rent will depend on if you have the bumpout or not, if we're talking about LF Xing). Finally, selling your unit now while the builder is still building units would not be prudent since the competition can be customized and is occasionally incentivized through sales promotions. With your marketing fees and the potentially lower sales price, you will be taking a hefty loss. Risk mitigation is key in today's housing market.

A lot depends on where your current home is and what the outlook for the market is there. Another option would be to consider renting the home out - if you can come close to covering your mortgage payment with a rental. Downsize for yourselves, pay extra on your mortgage towards the principle and wait out the market. I bet in 2-4 years things will have turned around substantially for you and for the market. Meanwhile you will have built some equity and not ruined your credit. Belt tightening is tough, but a good investment in the future. Have a great day and Take Care! Beth

JC07,
If you are thinking about moving, Now isn't the time to refinance,(as much as I would like to refinance you), Like you said, It would only take more of your equity. Since it is an interest only mortgage, I would advise you to pay EXTRA on your mortgage. Whatever you can afford. This will pay down your principle and give you a bigger return should you decide to move in the near future. By then, perhaps the value will go up and you will win both ways. The best of luck to you!
Michael

Michael D Delp
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