I spoke with my neighbor this week as she walked by with her dog. As we started talking the topic quickly turned to homes and specifically mortgages. She had just received an appraisal on her home which she had purchased in 2008 and was totally shocked at the numbers. What she had paid $625,000 for two-and-a-half years ago was now appraised at just $400,000! So even though she had put down over $200,000 at the time of purchase, she now had less than the 20% equity required to avoid the mortgage insurance (PMI) on a re-finance. I offered to look at the appraisal and, after checking my own comparables, pointed out some mistakes and omissions by the appraiser. I thought the home would sell for about $475,000 and suggested she take these comps to her mortgage broker to try and convince the bank her house was worth more . . . not sure if she will be successful.
Yesterday I had lunch with a client who had bought her home exactly two years ago. She had put 10% down and had to pay for mortgage insurance on her loan. Now she wants to re-finance (who doesn’t?) but her home is worth about 15% less. So she not only can’t avoid mortgage insurance on a refinance, she probably owes more on her home than it is worth.
Unfortunately, these are not isolated stories in today’s real estate landscape–good homeowners with excellent credit and jobs unable to re-finance and take advantage of the ‘new’ low rates (today near 4%!!). Or so you would think.
In talking with a mortgage broker this morning, I learned that homeowners who had put 20% down on a purchase (i.e. did not have mortgage insurance) can re-finance at the best rates for up to 125% of the CURRENT value of the home. This is through the government’s ‘Making Home Affordable’ program with a goal of keeping people in their homes. There is ‘HARP’ for refinancing and ‘HAMP’ for loan modification (which can be a nightmare!). There are some restrictions and qualifications but it is definitely worth checking out. As with any refinance, you will have to run the numbers against how long you plan to be in the home. Just make sure you have a qualified loan officer or mortgage broker who understands the details and can guide you in the right direction. Let me know if you have any thoughts or questions about this.
I just bought a new home . . . or at least a different home than the one I have lived in for the past 22 years. Being a realtor, I help people buy homes–first homes, second homes, investment property–all the time so it was not really a ‘new’ experience. But it was an opportunity to personally go through a process where my normal role is more of an observer and advisor. So what did I ‘learn’ by being the actual buyer . . . ? Continue Reading . . .
Filed Under Real Estate · Tagged:
Two reports in the media caught my attention this morning. First I opened up the Oregonian newspaper to read that Portland real estate was at a ‘new low’ in February. Then on my way to the office I heard on OPB/NPR radio that the market had ‘turned around’ and things were starting to look up! . . . Continue Reading . .
This morning I was at a closing for the purchase of a new home. Although I have sat through countless signings at the title company, I was again reminded of the amount of paperwork when there is a loan involved. . . . Continue Reading
I try to learn something new everyday. Today it relates to sewer-scopes. . . . Continue Reading