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Ailing Economy's Lower Rates Provide Opportunity to Refinance
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One problem some homeowners are having is that they had listed their properties for sale. Some lenders will not refinance a property that had been listed for sale within six months of the refinance. But other lenders will, Butler said.
"Some will let you do a mortgage refinance if the property has been off the market for one day. It varies from lender to lender," she said.
"We have three investors we work with who will do Fannie Mae loans even on properties which have been off [the multiple listing service] . . . for one day," Lepre said. "One of the three will not allow you to do a cash-out refinance, but the other two will."
When should you refinance?
"Don't do it to go on vacation, buy shoes or go out to dinner. Do not mortgage your house for something like that," Glick said. "But if you're going to pay off your credit card and cut it up, or if you need to do it so you do not go into default on your loan, then, absolutely, you should refinance."
Glick said you should never do a mortgage refinance just to get a tax deduction.
And finally, don't refinance to lower your payment but lengthen your loan, unless you are facing possible foreclosure.
When you refinance, the goal should be to lower the amount of interest you're paying, either by lowering the interest rate or shortening your loan term, Glick said.
Q My wife and I are thinking of tearing down our house. We love the neighborhood, and our street is experiencing a lot of tear-downs. Our house is a 1946 ranch that would probably fetch north of $500,000 if we sold it outright. We paid $249,000 10 years ago, owe $170,000 and have been paying down a 15-year mortgage at 4.75 percent for the past four years. We also make an extra payment each year. We have a small second mortgage that we used to pay off my law school loans.
The houses being torn down are smaller than ours and sell for less than $400,000. In their place are 5,000- to 6,000-square-foot brick houses with garages, an unheard-of premium feature for our street. These homes go for more than $1 million.
Should we tear down our house? Does it make economic sense? I think we could build our dream home for about $400,000, and then we would be sitting on a ton of equity. Heck, the land alone is worth more than we owe.
AWhether you tear down or sell your house, you've made a good investment.
