refinancing

[y26]

I was reading some past posts about people asking about refinancing their underwater mortgage and seemed like the consensus is finding a lender will be tough. I'm in a position where i want to refinance to lower my monthly payment. Its for a multi family (3units) i rent out. Ive owned it for 6 years and have never been late and always steady income. 6 years ago i received a 30yr fixed at 7%, Well now looking at rates and even getting something in the 5 or low 6's would lower payment significantly.

So i went to a broker, and i anticipated, i could get a loan up to 110% but the values nearby were 155,00 and my balance is $232,000. So no go.

BOFA owns my current mortgage and i was wondering how successful would i be working with them to lower my rate since they own the mortgage. Again i have never been late and as of jan 2011 my wife and i had a credit score of 805 her and 790 me. I guess BOFA would have no incentive in helping me because i am not in distress. What are your thoughts?

[disneysteve]

I think you are absolutely right. No lender, including the current lender, is going to work with you. You are current and you are 80K underwater. Why would anyone lend to you?

I would just keep working at that loan to get it paid down to the point where you are no longer underwater.

[y26]

Just for piece of mind i'm going to speak to BOFA tommorrow. I need to hear from their mouth directly and not wonder what if. What an upside down world we are in right now. With having good credit i have never been denied anything. So it is frustrating to do things right and still get the short end of the stick. Co-workers joke with me and say stop paying that will get their attention but i value my credit to much to do that. Thanks for the input.

[cschin4]

I personally hate debt and don't have any. And, having that much debt would scare the bejeepers out of me. Personally, i would sell it.

[disneysteve]

Personally, i would sell it.

How do you suggest he sell it when he owes $77,000 more than it is worth?

[disneysteve]

OP, I'm very curious. How much did you pay for the property and how much did you put down?

[cschin4]

How do you suggest he sell it when he owes $77,000 more than it is worth?

Sell for what you can and pay off the remaining debt. Lesson learned.

[disneysteve]

Sell for what you can and pay off the remaining debt. Lesson learned.

How would one go about financing that 77K difference? Can you get a personal loan for that much with no collateral?

Also, OP doesn't need to sell. He can afford the loan. He would just like a lower interest rate (understandably) but he is in no financial distress. Why take a 77K loss if you don't need to? Just keep making the payments you agreed to make and can afford to make until value equals loan balance and then you might consider selling if you want to get out of the deal.

[bjl584]

Sell for what you can and pay off the remaining debt. Lesson learned.

It's an investment property. It is a debt, but it also is generating a monthly income stream. Selling would be foolish as long as OP can afford the payment.

[y26]

I purchased the house in 2005 very high market paid $313,000 and mortgaged $250,000. I am not in distress and have steady income. My only gripe is i could really increase my income by dropping the interest rate. Which will free cash flow to put back into the property. That was all. I dont want to sell it because i beleive it could be decent income in the future. I'm 32 and have 24yrs left on it. My rents cover mortgage and the water bill. When things break i pay out of pocket and claim it on taxes. Its worked for me.

[cschin4]

It's an investment property. It is a debt, but it also is generating a monthly income stream. Selling would be foolish as long as OP can afford the payment.

Just because something is an "investment" property does not necessarily mean it is a good investment.

[disneysteve]

Just because something is an "investment" property does not necessarily mean it is a good investment.

True but if the property is cash flow positive, why sell it?

[bjl584]

Just because something is an "investment" property does not necessarily mean it is a good investment.

OP stated that he can afford the payment and that it is turning a small profit. The profit will increase as the note on the property is paid down. Selling does not make sense. It is a debt, but it an investment. Taking on debt is usually necessary with real estate investing. The name of the game is basically leverage and cash flow.

[disneysteve]

Taking on debt is usually necessary with real estate investing.

Dave Ramsey would disagree.

[bjl584]

Dave Ramsey would disagree.

Yes.

Mr Ramsey hates all and any debt. Correct me if I'm wrong, but I think that it's okay to get a mortgage by his standards, but it has to be the 15 year variety.