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Trying to refinance. Is it possible for our home to depreciate 26% in two years?!?!!!

We are in the process of trying to refinance our rate from 5.25% to 4%. We just got our appraisal back and was told it was 26% less than what it appraised for in '09. Can this be possible? There haven't been many home sales in my immediate area and the two that are currently for sale that are the same model as mine have them  listed way below market value due to dire circumstances in which they need to sell. I am in IL and am just wondering what my options are at this point.
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October 24 2011 - Rolling Meadows
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Profile picture for sunnyview
Unfortunately in some places, it is possible to have lost 26% in two years. If you are trying to refi for a lower rate you might want to see if you might be eligible for a HARP refi. HARP is set up for people that owe more than their home is currently worth, have a good payment history and would benefit from a lower interest rate. 

The government set HARP up to try to help owners who could pay, but would be helped by a lower rate. There is information on HARP from the government website here. I would start by seeing if you might qualify and then asking your current lender about it. Get their terms/fees and then you can shop the refi with other lenders to choose the best deal if you are eligible. 

There is a press release about changes in HARP that came out today here.
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October 24 2011
Profile picture for jojomander
@ Thomas,
We closed in April of 09, but not sure when our lender transferred/sold this loan over to Freddie Mac. I assume that makes a difference. How long does it typically take for a mtg. lender to transfer/sell a loan? We may have just made it by the skin of our teeth, but possibly missed it. I will find out more tomorrow after I call my mortgage company. Thanks.
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October 24 2011
Profile picture for sunnyview
Thank you for best answer! I appreciate it. One of my family members is in the process of doing a HARP loan right now to drop their rate. So far it has been pretty easy, but it really does make a difference who the lender is.

If you are close to the 125% of loan to value line, I would try get in there now before you lose your recently sold comps over the holidays. It can be hard to find recent sales then and that can lower your value on paper until the sales start again closer to February. I hope that all goes well for the refi.
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October 24 2011
Profile picture for jojomander
Yes, thanks for that information. We will be inquiring further about the HARP program since FreddieMac owns our mortgage and we owe more on our home than what it is worth. We are just looking to lower our rate, so hopefully this will be a smooth process. Thus far it has not been a smooth ride with the mortgage broker we are working with.

Thank you.
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October 24 2011
What month did you close in 2009?  If your loan was delivered to Fannie/Freddie prior to 5/31/2009 than you may be eligible for a HARP refinance?
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October 24 2011
Profile picture for Pasadenan
Looks like closer to 20% to me:


Obviously, the "bubble" indicated for the market area indicates the values were artificially high for a number of years and had very little to do with any "real" value.  You can blame NAR for lobbying the government for nothing down loans and similar for that.

Rolling Meadows IL market value trends
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October 24 2011
It absulutely is possible to have lost that much value in 2 years. It has/is happening all over, but contact a couple of agents to do a CMA to verify.
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October 24 2011
 
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