Zillow Advice: Buying New Homes - Should we refinance current home or buy a new home?

Rates have increased to the ...

Tue, 09 Jun 2009 13:42:00 GMT

Rates have increased to the point that 4.875% would cost a lot of money. Some items to think about if planning to rent your condo out are:
1. What is the job stability for you and your husband?
2. Are you going back to work after having the baby?A. Dual income vs. single income in the future?
3. What is the desirability of the area of where your condo is located? City or urban?
4. Will the rent you receive cover your mortgage payment and condo fee?

Generally if the rent received won't cover your payment and condo fee it would be advisable to sell the condo and move the proceeds to the new place.

As always seek counsel from someone you trust.

You may be over-simplifying ...

Tue, 09 Jun 2009 04:03:00 GMT

You may be over-simplifying your situation so if I may offer a bit of clarification so you know exactly what you are facing.

"We can refinance our current condo (from 6% to 4.895% APR)"
This currently would cost a small fortune to do because it requires paying points. If you don't have at least 25% equity in your condo you can add an additional .75 points.

"the lender will most likely require us to stay in the current condo for at least a year before we can purchase a new home w/ owner occuplied loan-this means we can't buy a new home and take advantage of the current market price. "
That's not true, there is no such rule.

"Alternatively, we can keep our current 6% loan and buy a new townhome that will have plenty of space for us to have a child. This option is attractive since we can buy a house with a low price given the current market condition and will have a home that has enough space."
If you do that, you will need to have at least 30% equity in your current home or you will have to qualify for the payments on both of them. This won't be an issue if you make enough, just want you to be aware of this guideline.

"What should we do?"
First, make sure your rate quote for a refi is accurate at 4.875%APR, that's extremely low given the current market. If you do refi and keep it, make sure you can qualify for the new purchase. Speak to someone who completely understands your situation.

Best of luck.

Could you rent your condo ...

Tue, 09 Jun 2009 03:39:00 GMT

Could you rent your condo out and buy what you want? Another option to obtain more space is to rent it. To get the townhouse you were planning on selling your condo? You could see what your condo is worth current market and how long they take to sell on average. Then you have a starting point.