Making the decision to refinance your house or put it up for sale has always been a life changing decision. Major changes to both the mortgage and real estate fields now greatly impact this decision. So today I’d like to explain some of these changes so that you can refinance with confidence.
A recent change in the mortgage industry now requires lenders to check if your home has been off the market for six months before they will help you refinance it. Real estate agents are showing that only 2-3% of their listings are selling every month. What this means for you is your house only has a 35% chance to sell If you list it for an entire year. If your payments will be unaffordable, it’s advised to refinance before trying to sell. I have a new mortgage rate and payment analyzer at http://seattle.rateswire.com/calculator which will look at your situation and give rates and pricing for your loan scenario on a Fannie Mae conforming loan. Check it out!
Another major change in the real estate industry is roughly half the transactions taking place are sales of distressed property. Distressed properties are bank owned foreclosures and properties with delinquent mortgages. These properties are liquidated far below normal market value. What this mean for you is that in order to sell you need to market your property and price aggressively to match these distressed property prices. The downside to this is if you mark down your property with an aggressive price but then decide to keep it and refinance, the low price you listed on the property is recorded on the refinance. For example, say a $260,000 house is discounted to sell fast at $220,000 but the seller has a change of heart and decided to keep it and refinance. The listed price of $220,000 is used as the value for the refinance. Talking to a real estate professional who is an expert on the eccentricities of your local market can save you from undercutting your own future by avoiding the scenario described above. They will have insight that will help guide your decision on when to sell or refinance.
Another major change is that mortgage insurance is becoming harder to obtain. It is no longer available to the average borrower. Because of this, the average borrower above 80% loan to value now needs to obtain a streamlined refinance from Fannie Mae or Freddie Mac through their Making Homes Affordable plan (MHA). The MHA is a short term plan instigated by the government to help during this economic recession. The MHA ends June 10, 2010. This date is the absolute deadline for MHA refinances, and should factor into your decision to refinance now. If you do not qualify for a normal refinance because your loan to value is over 80% and you don’t qualify for mortgage insurance, it’s important not to miss the June 10th deadline if you plan to refinance. And remember that your house must be off the market for a full six months prior to your refinance. If this applies to you and want assistance with your refinance or clarification of what your options are and the MHA, I’d be more than happy to help you. My contact information is on the right, and you can visit my profile here.
The last thing to take into consideration when selling your house is the value. The majority of houses selling in the Lynnwood area are in the $200,000 to $400,000 range. This makes refinancing condos, small, and custom homes much more difficult outside the summer months when most houses are sold. Lenders will not loan unless there are comparable sales within the last few months exist. If you are outside the range quoted above, the best chance for your house to sell and/or be refinanced is during the summer months.
When you do decide to sell, make sure that you are working with a local agent that demonstrates an in depth knowledge of your market area. This is especially true if you have a house outside the $200,000-400,000 range. You will be leaving money on the table if you discount your house too much because the agent you are working with doesn’t have their finger on the pulse of the local area, and therefore doesn't know how your particular house has appreciated or declined. You may find your house listed for sale too long and people will wonder if hidden problems exist or if they can lowball you if your house isn't priced just right. If you are in Lynnwood or Snohomish County Jess and Julie Lyda from Re/Max demonstrate a remarkable market knowledge and depth and I thank them for allowing me to use their graphics. Their blog is a good resource and you can check it out here.
If you are looking for the financial impact of refinancing vs. selling I recommend using my rate calculator on my website http://seattle.rateswire.com
I specialize in rapidly closing refinances with same day or next day approval and rate locks. This keeps costs down and the process simple. I have closed loans in Washington for the last eight years.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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Stephen: Thanks for the informative post. I wish you success this year!
Good afternoon. It is better to offer no excuse than a bad one.
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With best wishes :-D, Maris.
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With respect 8-), Zev.