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Need help on refinance for an "investment property"

I currently own a condo in Knoxville, TN. I bought it about 5 years ago, and was more concerned with my monthly payment then how the loan was structured. So I have an interest only loan for 124k @ 6.875%. Last year I got a promotion and moved out of state. I put my condo on the market with no luck, and finally resorted to getting a renter. My problem is that the rent barley covers the mortgage, and I'm not making any progress on paying down the principal. With interest rates as low as they are, I'd like to restructure my current mortgage at a better rate and use principal and interest. From all the info that I have gotten so far it sounds like a costly deal to refinance what is considered an investment property. I think that the interest rate will not be as low and I would only be able to receive 75% of the appraised value, which I'm sure is less then the original loan due to the poor economy.  Are there any good options to refinance the property without having to bring 25% of the value to the table? I have heard about AIM Loan, but I'm not 100% sold on an online mortgage company.

My wife and I are ready to buy a new house in our current city, but don't want to make a move until I have my condo situation resolved. Any advice or help is greatly appreciated.

 

  • September 06 2011 - Louisville
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Answers (4)

Profile picture for mjeter79
That is what I was afraid of. Thanks to everyone for taking time to give me advice.
  • September 07 2011
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The only option will be the 75% LTV.    Potentially you should be able to lower the interest rate by at least 2%, however I'm not sure if it would be worth putting "good money after bad" in that situation.  Since the loan amount is fairly small, the 3rd party closing expenses will also negate some of the potential benefit.

If your Interest Only option is scheduled to last another 5 years, it might be worth waiting out to see if the area experiences any appreciation which could allow a refinance without as much out of pocket.

I don't see any great choices for you based on what you described so far.

  • September 06 2011
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Unfortunately it is not owned by either Fannie Mae or Freddie Mac.
  • September 06 2011
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Best chance is if the current loan is Fannie Mae or Freddie Mac owned.    If that is the case you should have some good options available.    I would look into that first to see if you can take advantage of a HARP refinance.
  • September 06 2011
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