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Refinancing While Under Water


In many cases, you can lower your interest rate even if you owe more on your home than it’s worth.
As low as they may be, I still don’t think jumping into an adjustable rate mortgage makes sense. But, getting a six-percent rate or even a high-five-percent rate down into the four percent range DOES make sense. Don’t let the fact that your home is “underwater” hold you back from exploring the possibility.  

Do your calculations carefully. No doubt you will be adding some principal to the loan you already owe in order to cover the administrative costs of refinance. That puts you even more “underwater.” But if you are planning to stay in the home (or continue to own it as an investment) long enough that the savings each month, when totalled up, exceed the additional principal, go for it!

And, while I don’t think an adjustable rate loan makes sense (because they can always adjust up), if you have a plan to get out and not get hit by that adjustment, it may work for you. The key is planning!

Mortgage chart

The first step is to find out if your current loan is a Fannie Mae or Freddie Mac loan, or one of the others that may qualify. The easiest way to do that is to look up you loan on the Fannie and Freddie website or one of the links on your current lenders websites. Always start with your current lender. Read this article — it could save your home. And if not that dramatic, it could save you a lot of money!W

Written by Ann Heitland, sponsor of BestFlagstaffHomes.com.


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