topic Re: Question about refinancing in Home

Question about refinancing

geegerbee — Tue, 28 Jul 2015 18:22:26 GMT

If you have a $100,000 mortgage and the house has been devalued by half, and you try to refinance, will the bank make you pay the difference between the original amount you were loaned and what its value is now? Ex. If the $100,000 loan gets refinanced and the appraisal is now $50,000 do they refinance for $50,000 and not the original $100,000.? No way I could pay the difference in a lump sum. Someone on these boards must have had a similar experience. I am afraid to alert the bank---they might call in the loan.

Re: Question about refinancing

hyacinth003 — Tue, 28 Jul 2015 18:49:44 GMT

If I am understanding your question, you refinance the amount of the rest of your loan.

You borrowed it, you owe it.

The lending institution usually requires an appraisal, so if your property is worth LESS than the appraised value, they may not want to lend the money. Not a good deal for the lender.

I have refinanced a few times, but the property was always worth more than what we borrowed, so I have not had any experience with the situation you described.

Hyacinth

Re: Question about refinancing

itsmagic — Tue, 28 Jul 2015 18:56:55 GMT

I have not had this happen but I think there are federal loan programs available for this situation if you qualify.

Re: Question about refinancing

hyacinth003 — Tue, 28 Jul 2015 18:59:35 GMT

@itsmagic wrote:
I have not had this happen but I think there are federal loan programs available for this situation if you qualify.

Is that the one called HARP?

Hyacinth

Re: Question about refinancing

itsmagic — Tue, 28 Jul 2015 19:12:28 GMT

@hyacinth003 wrote:
@itsmagic wrote:
I have not had this happen but I think there are federal loan programs available for this situation if you qualify.

Is that the one called HARP?

Hyacinth

Yes and I think there is another one but I don't have any experience with either.

Re: Question about refinancing

jaxs mom — Tue, 28 Jul 2015 19:19:13 GMT

Underwriting is not going to allow the bank to finance a 100k loan on a house valued at 50k. If you're making your present mortgage payments they can't call in the loan you already have just because your house has reduced in value.

Re: Question about refinancing

sam96 — Tue, 28 Jul 2015 19:41:46 GMT

I would look into one of the HARP programs if the amount owed is more than the appraisal. Otherwise, refinancing would not be an option since a traditional refi would require the loan to be only 80-90% of the appraised value, and if more were owed these conditions couldn't be met without bringing cash to the table.

Re: Question about refinancing

tedEbear — Tue, 28 Jul 2015 20:19:20 GMT

BAILEYSUE____ The smartest thing to do is go to Your bank first (if it is a reputable bank) and see about re-fi through them, or, go to a finanacial ADVISOR, NOT a finance company, to see what the best way to go is. You will HAVE to refinance your BALANCE, not what you think it is worth. Can you paint,new carpet, landscape? Things like that can help get a higher appraisal. NOT PROFESSIONAL ADVICE HERE, JUST IDEAS FROM READING LOTS OF DIFFERENT STUFF!!!!!!! tedEbear

Re: Question about refinancing

Nuttmeg — Tue, 28 Jul 2015 20:46:27 GMT

Information about a Harp Loan. https://en.wikipedia.org/wiki/Home_Affordable_Refinance_Program

More info about HARP http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx

Re: Question about refinancing

queendiva — Tue, 28 Jul 2015 21:18:10 GMT

Your lender will not allow you to refinance a loan for more than the present value of your home. You must continue to pay the loan you have or sell. Those are your options, along with foreclosure.

Re: Question about refinancing

sandraskates — Wed, 29 Jul 2015 05:03:07 GMT

Many here have nicely addressed your refi issue.

I'd like to add that your County may reduce the property taxes on your house - if it hasn't already done so.

You may be able to ask for a County re-appraisal / re-assessment and if the value has gone down they may reduce the taxes to reflect that. Of course when the values tick up again - and in many places they already have - your property will be re-assessed and the taxes will go back up.

Re: Question about refinancing

shoekitty — Wed, 29 Jul 2015 04:45:43 GMT

@hyacinth003

As I understand it (in California anyway) you need 15 to 20% equity in the home for a regular refinance now. Finance company wants to make sure if you default they can get their money back.

It was awful for so many homeowners here after the mortgage collapse in 2008. Those that had bought homes for 695,000 to 855.000 on our block now had homes worth 300,000 to 475.000. Bank wouldn't help. A few lost them.

Now, HARP can help most anyone I am told. Those that struggled through and were able to make it without foreclosure, were approved for loans in the last few years. They juggle numbers, give new mortgage pmts so the homeowner could afford to stay in home. There are many catches and loopholes in place so the loan company won't be taken advantage of. Things are spelled out better in the new truth in lending.

Re: Question about refinancing

151949 — Wed, 29 Jul 2015 13:39:56 GMT

First - when a home is refinanced or a home equity line is extended it is only for about 80% of the assessed value of the home. So - in the OP's example - if a house was worth $100,000 and the value dropped to $50,000 it may be conceivable the owners could refinance up to $40,000. When the value of a home drops it really only matters if the owners want to either sell it, or take out loans against it's value. There should be no reason you couldn't stay in it and continue to make the payments you agreed on when you bought the house. Just because assessed value drops doesn't mean the owners have lost any money as long as they keep the house.

Re: Question about refinancing

flickerbulb — Wed, 29 Jul 2015 21:10:30 GMT

I am curious to know how you have come to know that your home's value has dropped 50%.

The housing market is rebounding. Home sales are up and new construction is in full force, at least in my area,

Did you look at the county tax assessment? If so, it is never based on the home's value.

They use a different formula for assessing taxes. Your mortgage may be for 100K, but the taxed value in your area may be 50K.. That is good, because you receive a lower tax bill at the end of the year.

In answer to your question, the home is reappraised and then financing is based on the appraisal. If you borrowed 100K, you still owe that but may get more favorable terms in years or percentage rate.

Re: Question about refinancing

Nuttmeg — Wed, 29 Jul 2015 21:44:04 GMT

@151949 wrote:
First - when a home is refinanced or a home equity line is extended it is only for about 80% of the assessed value of the home. So - in the OP's example - if a house was worth $100,000 and the value dropped to $50,000 it may be conceivable the owners could refinance up to $40,000. When the value of a home drops it really only matters if the owners want to either sell it, or take out loans against it's value. There should be no reason you couldn't stay in it and continue to make the payments you agreed on when you bought the house. Just because assessed value drops doesn't mean the owners have lost any money as long as they keep the house.

This property may not regain its value. When this house sells the owner would have to bring cash to the closing.

Re: Question about refinancing

151949 — Wed, 29 Jul 2015 22:46:07 GMT

@Nuttmeg wrote:
@151949 wrote:
First - when a home is refinanced or a home equity line is extended it is only for about 80% of the assessed value of the home. So - in the OP's example - if a house was worth $100,000 and the value dropped to $50,000 it may be conceivable the owners could refinance up to $40,000. When the value of a home drops it really only matters if the owners want to either sell it, or take out loans against it's value. There should be no reason you couldn't stay in it and continue to make the payments you agreed on when you bought the house. Just because assessed value drops doesn't mean the owners have lost any money as long as they keep the house.
This property may not regain its value. When this house sells the owner would have to bring cash to the closing.

So don't sell, just keep living there, and pay off the mortgage over the years. Not everyone moves all around. We stayed in our first home 28 years and had the mortgage paid off ten years before we moved.

Re: Question about refinancing

151949 — Wed, 29 Jul 2015 22:55:12 GMT

A lot of people on this board seem to feel a house is not a place to live and raise a family and have a life. To many here it seems they look ata house as how much can I make off it. I don't see a house that way. To me, even if you make money from the sale of a home , you will still have closing costs on a new home , mover costs and you always have to put money into a new home to make it comfortable for your family. This really eats into your profits.I also just sim[ply hate moving.I lived in my last house for 28 years and will live inb the currant one until they put me in the nursing home. i don't look at my home and see $$$$$$, I look at it and see somewhere soft, cozy warm and safe and filled with love. if the value drops - it drops, so what? I'm not going anywhere.This is my home.