HOW TO LOWER MORTGAGE WITH NEGATIVE EQUITY

Question

i currently owe more than my house is worth. i would like to refinance to lower my monthly payments. is there any way to do so? i bought for 6 years ago for 138k, owe 124k and house is worth about 120k maybe less. current mortgage is 1100 5.25% 30 yr conventional loan. would like to

Curt Davis · Answer

Just bring a large sum of cash to lower your mortgage and you will reduce your debt and create some equity.  Problem solved!!

Alex Reidy · Answer

thanks for the fast responses. im looking into it but i think you guys are right i cant get the closing costs back fast enough and my property tax is so low now it wont help. thanks for the info.

Kiran K · Answer

Try the HARP program, you can get upto 125% loan on appraised value. I think the program is for only owner occupied.

I agree with Joel ultimately you need to look at amt of closing cost you have to pay to close the loan and amt of savings every month with the new interest rate if u cant recoup that in 2-3 years I would not get into it.

Joel Owens · Answer

You might be better off appealing and fighting your property tax assessment and getting that reduced to lower your total monthly payment.

Joel Owens · Answer

That's a pretty low interest rate to refi.

You would first need to determine what kind of mortgage you have (RMBS,Fannie,Freddie,etc.) and then call your servicer you make payments to on the phone to discuss options.

If you are fixed at 5.25% then most likely the servicer would not do a loan modification lowering the rate if your payment were on time.If you have an adjustable rate loan that could explode upwards they might do something.

Even if you can REFI the question is does it make sense to do so??

If value comes in at 118k for the appraisal and you pay 6,000 to payoff the mortgage and another 3,000 in closing costs then you have to outlay 9,000 today to save maybe 75 to 100 basis points over the long haul.

100 basis points you might save 76 a month off the mortgage payment getting a 4.25% fixed interest rate.

So if that is the case you would need about 118 months to realize the outlay of 9,000 to refi and payoff the mortgage.That is almost 10 years before you get your money back to break even.Most people move every five years.

Just looking at it doesn't make sense to do it unless your existing rate was much higher than it currently is.

HOW TO LOWER MORTGAGE WITH NEGATIVE EQUITY

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