Over the past 30 years, the banking industry trained the public to treat their house as a revolving loan account. But as the housing bubble hit, that revolving loan account got smaller and smaller until one day, people got out of bed and discovered that they had high mortgage debt and faced a pay cut or lay off. That is when the real fun began.
A family came to me and asked if they should refinance their home after being in the home for about 2 years. The ad says that they can qualify for a loan with a rate 2% lower than what they have now. They also had the impression from other people that once you buy a house, the equity in your house increases every year. That may have been true from 1950 to 2005 but not today. I told them that they can talk to the bank about it. They had nothing to loose by inquiring. They reported back to me later telling me that the bank said they would not advise them to refinance since they had no equity in the house and the fees to do the refinancing would not be worth the refinancing.
Don’t be fooled by what you read in the newspapers or see on TV. Mortgage rates are the lowest that they have been since my parents bought a home in 1952. But for some homeowners, the opportunity to refinance could be placed out of reach by an appraisal. The process isn't an exact science and homeowners may be surprised to find their property isn't worth as much as they have been led to believe.
Read the article below “Refinancing your mortgage? Understand appraisals” published September 30, 2011 by Zion’s Direct Online Brokerage and written by Candice Choi.
http://think.zionsdirect.com/2011/09/30/refinancing-your-mortgage-understand-appraisals/?m_source=ym_email&utm_medium=email&utm_content=article_1&utm_campaign=2011_10_05_newsletter
A family came to me and asked if they should refinance their home after being in the home for about 2 years. The ad says that they can qualify for a loan with a rate 2% lower than what they have now. They also had the impression from other people that once you buy a house, the equity in your house increases every year. That may have been true from 1950 to 2005 but not today. I told them that they can talk to the bank about it. They had nothing to loose by inquiring. They reported back to me later telling me that the bank said they would not advise them to refinance since they had no equity in the house and the fees to do the refinancing would not be worth the refinancing.
Don’t be fooled by what you read in the newspapers or see on TV. Mortgage rates are the lowest that they have been since my parents bought a home in 1952. But for some homeowners, the opportunity to refinance could be placed out of reach by an appraisal. The process isn't an exact science and homeowners may be surprised to find their property isn't worth as much as they have been led to believe.
Read the article below “Refinancing your mortgage? Understand appraisals” published September 30, 2011 by Zion’s Direct Online Brokerage and written by Candice Choi.
http://think.zionsdirect.com/2011/09/30/refinancing-your-mortgage-understand-appraisals/?m_source=ym_email&utm_medium=email&utm_content=article_1&utm_campaign=2011_10_05_newsletter
2 comments:
I agree with you!! Refinance is really a very good option to lower a high interest rate and take advantage of lower rates. However, before a borrower applies for a mortgage refinance, he/she should go for a property appraisal so that he can know his property value. Unless there is around 20% equity in the property, none of the lenders will be ready to offer the borrower a normal refinance.
That is some advice that I wish more people will take. I wish I had a dollar for every person that believes that they can buy a property in April and sell or refinance it at a profit in May.
They watch to much of the "get rich" TV shows on Early Morning TV.
Post a Comment