Mortgage refinance?

PhantomOG

Anyone here ever go through a mortgage refinance? I've been in my house for about a year right now, and prices in the area keep going up. I'm itching to refinance my two mortgages (80/20) into a single loan. The big assumption being whether or not the house will be appraised accordingly (80/20 total must now be 80 of new appraised value).

If you've gone through a refinance before, typically do the appraisal values come back low, high, or just about right for your house? The following websites I've been looking at are all pretty high in my opinion just based on listing prices in the neighborhood, but if I can get it appraised as such I sure wouldn't mind it.

Zillow
Ditech's e-appraisal
Bank of America's e-appraisal

I know it sounds like wishful thinking assuming my house has gone up almost 20% in a year, but I've heard that appraisals for home equity loans are typically on the high side, and was just wondering if the same was true for mortgage refinancing.

Ron-P

I just singed loan docs yesterday for a $150k LoC. My appraisal came in just about right on, maybe a bit on the high side as they just did a drive-by. I've never done a mortgage refi.

Maurice

Get a real estate agent to pull sales comparables on your home. When you get them, look for 3 sales at the value your looking for. If you can find 3 then your appraisal should come in near that price if not higher. Appraisers need 3 sales and 3 current listings to substantiate the value. That way you wont get any rude awakenings during your refi. Also, your current mortgage company should be more than happy to do the refi and you might get treated better.

PhantomOG

Thanks, sounds like good advice. I think I'll end up needing to wait awhile longer.

HBombToo

The mortgage company should do an appraisal prior to a refi. The typical cost for an apraisal is about $250.00. You can roll this cost into the the mortgage.

I got tired of messing around with the whole damn thing and decided to just pay off the mortgage. I calculated a saving sof about $250K not including losses due to inflation and the devaluation of the dollar. I began thinking about this after I saw a note from Ron-P and decided to follow suit. It's a good feeling to know its only about taxes and insurance.

Good Luck!

HBomb

Ron-P

Yep, the no mortgage thing is awesome. Way to go paying that off. I did not have any type of line of credit so I thought it'd be good to open one up just incase.

Shizelbs

Well, I know Zillow is pretty much as wrong as can be for my area, so, take their information with a grain of salt.

I've never done a refi, but I know people that have and its made a huge difference in their personal finances. Just remember all the closing/bank fees to make sure its worth your trouble. The nice benefit is if you get it all in one, you can drop the PMI if you are using that now.

PhantomOG

Well, I'm not paying PMI but the interest rate on the 20 loan is not pretty, which is why I'm jumping at the first refi chance I can get.

Zillow is really odd for me. When I bought my house, Zillow was low for my house. Now its probably too high.

steveinaz

You should be able to get an accurate appraisal by pricing your house out via square footage. Look at recent sales in your area and what the price-per-sq foot was. This will get you close; we've done 2 re-fi's, both were accurate appaisals.

heiney9

HBombToo wrote:

The mortgage company should do an appraisal prior to a refi. The typical cost for an apraisal is about $250.00. You can roll this cost into the the mortgage.

I got tired of messing around with the whole damn thing and decided to just pay off the mortgage. I calculated a saving sof about $250K not including losses due to inflation and the devaluation of the dollar. I began thinking about this after I saw a note from Ron-P and decided to follow suit. It's a good feeling to know its only about taxes and insurance.

Good Luck!

HBomb

Not pointing this response to anyone in particular just another POV. It's not always the best idea to pay off a mortgage. When other time in history could you borrow money for around 5-6%. The idea is to take say the $150K in cash used to pay the mortgage off and invest it. Conservatively you can make more (say 10-12%) than the rate you are paying to borrow. So crudely your net in this example would be + 5-6%. Even if you take on slightly moderate rsik in investing the $150K instead of paying off a low interest loan you could avg say 15% a year over a ten year period and be much farther ahead than using that money to pay off low interest debt.

You have to be disciplined and in it for the long haul for this to benefit. Each person has their own level of comfort as far and debt and investing is concerned, but this is why it's not ALWAYS a good idea to pay off low interest debt, especially on an appreciating asset like real estate.

I know many people who could pay off their mortgage, but chose not to and invest the cash in very conservative diversified investments and net 8-10% annually. Of course their lifestyle and careers are stable so having a monthly mtg payment isn't a burden.

Just my .02c. Food for thought not a criticism of anything in this thread.

Shizelbs

Don't forget neighbors being a good source of information.

Polkersince85

Be sure to look at your current mortgages and make sure there is no prepayment penalty. Many lenders have slipped that clause into the recent mortgages. Just a thought.

daboyz

Make sure you get all the closing costs up front. All of your finer institutions will give you estimated costs. Shop around. Also, how long do you plan on staying in this house? If it is for along while, then it should be worth the cost. If not, then figure out what the payment will be w/closing costs and will it save you money from what you are paying now. If you aren't at 80/20, PMI probably isn't worth it.

wallstreet

heiney9 wrote:

...The idea is to take say the $150K in cash used to pay the mortgage off and invest it. Conservatively you can make more (say 10-12%) than the rate you are paying to borrow. So crudely your net in this example would be + 5-6%. Even if you take on slightly moderate rsik in investing the $150K instead of paying off a low interest loan you could avg say 15% a year over a ten year period and be much farther ahead than using that money to pay off low interest debt.
...

These numbers look a little high to me. What moderate risk investment returned 15%? The 5 year average for the S&P is 6%. So let's go riskier with the Nasdaq. The QQQ's returned 2.3% for the past 5 years. The historic returns on the stock market average around 9-10%. Anyone that has had any money in the market back in 2000 knows the pain of paper losses. If you can average 15% you need to go straight to Wall Street.

wallstreet

What I do like about mortgages is the mortgage interest write off. That really helps at the moment.

venomclan

wallstreet wrote:

What I do like about mortgages is the mortgage interest write off. That really helps at the moment.

Agreed, sometimes overlooked, but can lead to six figure savings over the years.