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Refinance Options

We owe what our house is worth, according to your zillow estimate.  Our loan is not Fannie Mae or Freddie Mac.  Are there any refinance options for us?  We are not upside down, but have little to no equity.  We have excellent credit.
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July 20 2013 - Lakeside
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Answers (13)

If you are even with what you owe based on Zillow estimate, then you will either need the house to appraise high enough for you to have 5% equity, or you need to be willing to bring enough cash to the loan closing to pay down the principle enough to make a new loan possible.  Find a lender and have them get you some quotes, and have them order the appraisal for you.

You did not mention what your current interest rate is, so you may want to make sure the numbers make sense to refinance.  Even if you are lowering your rate, you will probably be adding mortgage insurance at 95% LTV, paying closing costs of refinancing, paying an appraisal fee, re-setting the term length of your loan, and possibly bringing cash to close to pay down the principle of your current loan.  The overall benefit to you needs to make sense. 

(Total cost of new loan) / (payment savings from new loan) = (Months to recoup cost of new loan). 

Consider the length of time it takes to recoup the cost of the new loan, then ask yourself if the home you live in now will be the place you live at least that far down the road. If you plan on selling before you recoup the cost then you may want to sit tight because it may not be worth doing anything.  If the savings from the refinance is significant and you plan to live in the house long term, then it is probably worth it.

Good luck!

 
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July 22 2013

Agree with all responses below, I will add that if you are willing to put out more money at closing you could get into a conventional loan product to make up for the lack of equity. If the property value and payoff are even then I would recommend doing the research on comps in your area based on recent sales in the last 6 months and worse case scenerio, choose a lender , lock in and have an appraisal done. Worse case scenerio you will be out a few hundered dollars to find out where you and your property stand as far as refinance options if you choose to not move forward at that time after the appraisal is completed.

Good luck!

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July 22 2013
Not expensive at all. There are two types: Single premium (one time) and monthly MI. Depends on credit and LTV. You should speak with a mortgage professional and apply. 

Invest the money in an appraisal to save money over the life of the loan.
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July 22 2013
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I don't know that refinancing for a 4% or so interest rate is worth the PMI required with little to no equity. How much is PMI?
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July 22 2013
I agree with answers below. Zillow isn't always accurate. If you want more accuracy, contact a Realtor or Mortgage Banker that can provide a Comp Market Analysis. Additionally, You don't necessarily need to have 20% in equity. If you would like more information, contact me through my profile.
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July 22 2013
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Our loan is not VA or FHA.  We have a traditional 30 year fixed at 6%.
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July 22 2013
Zestimates are not always accurate but lately, at least in our market, they have consistently been very low when compared to the actual appraisal on a property. If the Zestimate is about even with what you owe there is a chance you have at least 5% equity already.

I would talk to a Realtor that is a local area expert and ask for a comprehensive CMA. Any good agent will do this for you even though they will not be making any money off of it. Its all part of the business and, hopefully, next time you buy or sell a home you will call them again.

Sincerely,
Greg

P.S. This has not been mentioned yet, is there any chance your loan is an FHA or VA loan?
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July 21 2013
Amy,
You should have stopped at ..."error on their calculations".  Your last sentence is incorrect as lenders do lots of refinances with 5% or more equity.
jnlvars,
Asking an Agent in your area for a market analysis would be best option to determine approx value. Getting an opinion of value from an appraiser in your area would be another option.  That appraisal fee would typically be less than a full appraisal and would be all you would need as an estimate.  A full appraisal  ordered by you could not be used, so don't spend that much money.
If it appears that you have at least 5% equity, talk with a local lender about refinance options.
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July 20 2013
An appraisal will be a couple hundred dollars...~ $200 to ~$400.  Alternatively, you could engage a real estate agent to do a CMA for you or at least provide a recent list of sales within 1 or 2 miles of your home to give you an idea of your home value.  

What state are you in?
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July 20 2013
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As is stated above, loan is not Fannie Mae or Freddie Mac. Home was last appraised in 2005 when we purchased. How do I get an appraiser and how much should that cost?
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July 20 2013
Assuming that you have checked both Fannie and Freddie websites to be certain, if you have at least 5% equity, you could do a regular refinance with PMI. Remember, Zestimates are just that - estimates. A professional appraiser will actually determine the value. Perhaps the value is not as bad as you think.
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July 20 2013
You'll want to talk to a lender; the Zillow estimate is not a great measure of home value.  When was your home last appraised?  Is this a VA loan?
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July 20 2013
Don't base your value on Zillow. They can have a high percentage error on their calculations. However, I will tell you that you will need at least 20% equity in order to refinance.
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July 20 2013
 
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