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is it viable to refinance

Submitted by on Tue, 12/14/2010 - 02:57
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Hi! I have a mortgage loan of about $75,000. The market value of my house is $60,000. The interest rate on the loan is around 5.45%. It is a 25 year fixed-rate mortgage. I have a chance to refinance the mortgage loan. The interest rate on the new loan is around 4.1% and the monthly payment will be around $700. My current monthly mortgage payment is around $770. Should I refinance my mortgage?


You've mentioned that your property value is $60,000 whereas your mortgage amount is $75,000. This means that you won't have any equity in your property. Rather, you're underwater. In such a situation, it's quite surprising that your lender has offered you a refinance. Keeping in mind the present market situation, the lenders won't refinance if you don't have equity in your property.

However, you can always go for the less-popular option of “Cash-in refinancing”. In this option, you, the borrower will have to bring cash to refinance in order to reduce the amount you owe on your mortgage. This will help you build equity in your property and then get refinance. As home values have dropped and equity in the properties have dipped, quite a number of people are using this option to get a mortgage refinance.


Submitted by Anna Sweeting on Tue, 12/14/2010 - 22:16

Anna Sweeting

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