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What to do

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wooying Joined: 13 Dec 2009 Posts: 2 1.86 Dollars($)	Posted: Sun Dec 13, 2009 11:37 pm    Post subject: What to do Like 0 Dislike 0 Currently I am living in NJ and I own (actually bank) my condo. I have a 5.625% fixed APR. I borrowed 184K and currently owe 170K. I purchase my condo at 230K. I was thinking about A) refinancing to either a lower rate (either 30, 15 year fix or ARM). Although, I would like to not stay at my current residence past 5 year, because I am seriously considering going back for my MBA degree. I might have to stay longer than expected. I make decent money at my current job and in a very stable position. What would you suggestion would be my best options. My current mortgage is about 1500 a month (with escrow), I am looking at a house around 450K. Any advice out there for me? Thanks in advance.
Niicss Joined: 03 Oct 2005 Posts: 4834 Location: New Jersey 508.88 Dollars($)	Posted: Mon Dec 14, 2009 2:49 am    Post subject: Like 0 Dislike 0 It is a good option to refinance the mortgage if you are planning to stay in the property for at least 8-9 years. This will help you in offset the closing costs which you will have to pay when you refinance the loan. If you can afford the closing costs and pay off the mortgage dues, then you can definitely refinance the loan. However, check out for the rates that you would be receiving. If the rates are quite low from your present interest rate, then only you should go ahead with the refinance. _________________ Good is the Enemy of Great.
jveenstra Community Expert Joined: 10 Nov 2008 Posts: 1310 Location: River Edge, New Jersey 274.62 Dollars($)	Posted: Mon Dec 14, 2009 3:10 pm    Post subject: Condo Like 0 Dislike 0 Not sure what you mean by (actually bank) the condo? You purchased with a 20% down payment, so, you do not have PMI. That puts you in a good position to refinance, if it makes sense and you want to do that, even if the present condo value has dropped. If the current mortgage is owned by Fannie Mae or Freddie Mac, the special refinance programs that now exist allow you to refinance without PMI even if the value has dropped to where you would normally need PMI. You are also looking at a house around $450,000. Does that mean you would be selling the condo or renting the condo. While renting may seem like an option, there are mortgage guidelines in the past two years that may prevent using the rental income to offset the monthly mortgage payment--that means you would need to qualify for the house mortgage purchase with both mortgages in the debt ratio. Refinancing could make semnse to 15 Fixed or an ARM The 30 Fix rate may not be low enough to make sense. What do you believe to be the value of the condo today? That will help naswer some of the questions. _________________ John Veenstra, Sr Mortgage Consultant Approved Funding Corp Licensed NJ NY CT PA 201-833-0123x278
gmakerley Community Mentor Joined: 09 Nov 2007 Posts: 12376 Location: bloomfield, ct 58.49 Dollars($)	Posted: Mon Dec 14, 2009 9:04 pm    Post subject: Like 0 Dislike 0 you're staying, you're going and thinking of refinancing your primary residence, and a few sentences later you're looking at a $450K property. is it that you simply admire this other property or that you're now changing your mind and want to purchase it? confusing us won't give you any particularly good insights. _________________ George M. Akerley Mortgage Underwriter/Consultant Word of Excellence- Writing/Editing/Proofreading 860-221-5044
wooying Joined: 13 Dec 2009 Posts: 2 1.86 Dollars($)	Posted: Mon Dec 14, 2009 10:15 pm    Post subject: Like 0 Dislike 0 jveenstra - What I mean with the statement "(actually bank) the condo" meaning the bank actually owns the property until I pay them back. To answer the other questions, I currently got my loan from a major bank, and not Fanny Mae or FM. I would sell my condo and use the sale of the house to purchase the new home. Not sure if this helps, I purchase the condo in 04 of Oct. And below are the rates my bank is giving me if I refinance. What do you think is the best option and I think a fair market value for my current home would be 235K, thanks again. Rate Discount Points Est Closing Costs APR Est Monthly Payment 15 Year Fix 4.875% 0.275 $2,012.86 4.958% $1,333.31 4.875% 0.275 $2,012.86 4.958% $1,333.31 4.750% 0.900 $3,075.36 4.928% $1,322.32 4.625% 1.400 $3,925.36 4.879% $1,311.38 4.500% 1.775 $4,562.86 4.811% $1,300.49 4.375% 2.275 $5,412.86 4.762% $1,289.66 ARM 5/1 4.750% 0.025 $1,587.86 4.776% $886.81 4.250% 0.650 $2,650.36 4.328% $836.30 4.125% 1.025 $3,287.86 4.234% $823.91 3.875% 1.525 $4,137.86 4.025% $799.41 3.625% 2.275 $5,412.86 3.835% $775.29 gmakerley - sorry for the confusion, I am tempted to replace my current property with another property. I like to take advance of the home incentive buyer of $6500. Thanks for your input.
jveenstra Community Expert Joined: 10 Nov 2008 Posts: 1310 Location: River Edge, New Jersey 274.62 Dollars($)	Posted: Tue Dec 15, 2009 7:48 am    Post subject: Refinance or Purchase Like 0 Dislike 0 You got your loan from a bank. That does not mean it is not "owned" by Fannie Mae or Freddie Mac. No borrower deals directly with Fannie Mae or Freddie Mac. Maybe you know that already. If the bank that owns your loan, then it is a portfolio lender. then your loan is not owned by Fannie Mae or Freddie Mac. Most banks are not portfolio lenders. Most actually get their money from Fannie Mae or Freddie Mac and simply "service" the loans for them. As long as the value of the condo is at least about $225,000, you can consider refinancing, especially if your middle credit score is over 740. Closing costs without points would be about $3,600 and if you escrow for taxes another couple thousand will change hands at closing. The 15 year fixed rate should today be 4.50% to 4.75%. At a higher rate the lender can pay some of the closing costs and make the costs look lower. A 5/1 ARM should be 4.500% and zero points today. I never met anyone who paid points on a refinance unless they know they are living there eight years or longer and even then hardly anyone ever pays points on a refinance. If you sell, and you actually sell for $235,000, you should clear a little over $50,000. If you buy for $450,000, a 20% down payment would be $90,000. A lesser down payment would require private mortgage insurance. With at least a 10% down payment to keep the mortgage conforming at $417,000 or less, the PMI monthly payment would be about $215 a month. Maybe you have the extra money to get to 20% down or more. The iffiness of the market, the price you get and how long it takes to get a buyer, seem to make the sell and buy process a little iffy. The refinance can happen now. The sell and buy makes sense if you "really" want the house. Then it is worth a try. If it works, great. If not, the opportunity to refinance may be gone if rates rise. You are not bad off where you are, so, not necessarily a show stopper for selling and buying. _________________ John Veenstra, Sr Mortgage Consultant Approved Funding Corp Licensed NJ NY CT PA 201-833-0123x278

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