My present mortgage is at 4.87% -- since I can't sell until the market improves, is it worth it to refinance?

Asked by southb, Farmington, CT Thu Oct 6, 2011

I purchased my condo in May, 2009 with the intention of taking advantage of the 1st time homebuyer's credit AND because, at 53, I thought it was time to own my own home instead of renting. Everyone told me that I'd be saving money, building equity, etc. At the time, house prices were way down, but condo prices had stayed the same. The condo I bought is in a gated community populated primarily by 55 residents. It has a pool, tennis courts, dog play areas, and it's surrounded by a golf course. I need to leave this state in order to get back into my profession, so I was planning on selling in May, 2012; BUT in 2 years and 5 months, my condo's value has dropped -- I paid $225K, and now it's estimated at $180K. I will definitely rent it if I can't sell -- since I'm stuck with it, should I try to refinance? What are the costs of refinancing? Would the difference between 4.87% and 4.0% be worth those costs if I have to keep the place for another 10 years?

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Gregorio Denny’s answer
Gregorio Den…, , San Diego, CA
Thu Oct 6, 2011
Your first step is to determine "if" you are able to refinance. You didn't mention what your balance is, but if it's more than the value you will have limited options for a refinance. More information is needed to determine if a refinance is possible and then it can be determined if it's worth it.

Check to see if your mortgage is owned by Fannie Mae or Freddie Mac, if so, you may qualify to refinance a mortgage that is upside down. You may also qualify if you have a FHA or VA mortgage.

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1 vote
Shane Milne, Mortgage Broker Or Lender, South Jordan, UT
Thu Oct 6, 2011
Gregorio brings up some excellent questions, the amount owed on your mortgage vs. it's $180k estimated value will impact your refinancing options (if any). If you are refinancing $180k, the difference between 4.875% & 4.000% is $93.22/mo, 10 years is 120 payments, or $11,186 saved over that time. Standard closing costs are not that much, but if you have to pay points to get that interest rate then the costs could potentially increase to that level - based on variables (credit, loan-to-value, occupancy type such as a condo, etc.) will determine how much the costs would be for a 4% interest rate. There is a list of information needed to determine if you can qualify for a mortgage in the web reference below, feel free to come back here and provide as little or as much as you'd like in order to get better feedback.
0 votes
Sandie Teren…, Agent, Farmington, CT
Thu Oct 6, 2011
With interest rates at an all time low, and the current prices in this real estate market I would recommend that a re-fi is a good option depending largely on how long you intend to keep the property. Chances are this is a long term recovery so if you plan on keeping this property for more than 3-5 years at t he least, then re-fi. Sandie Terenzi Keller Williams Realty
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Scott Godzyk, Agent, Manchester, NH
Thu Oct 6, 2011
at that rate, it may not be worth the cost to refinance if you are not planning on staying there for a long time. Your savings will be wiped out by the cost of teh refinance
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