Interest-Only Refi on an Underwater Condo in Kansas City

6 Replies

Here's the story:

About 30 seconds before the bubble burst my wife bought a condo in Kansas City. It is now, and has been for some time, underwater. We live in Chicago now and she rents the condo out. It's in a very nice building, and is very well appointed. Even with the assessments, it almost cash flows. If we had an interest-only mortgage instead of a conventional mortgage, it would cash flow.

So that's the question: How do we get from conventional mortgage land to interest-only land on an underwater condo in Kansas City?

Ideas? Thoughts? Referrals?

Thanks everyone.

I would think about selling it. Even taking a loss might be better than keeping it.  The dues are certainly  a negative and  do you see any real appreciation in the coming horizon?   And if so you think it will really  raise enough to justify the ownership.  Look at what you are paying and the interest you have paid already. You might see that you have depreciated it and taken advantage of the interest deduction that you  are in better shape than you think, so far.

I vote sell it and get into something that will help you!

Perhaps you could get an investor to buy the condo at the loan balance through a contract for deed and get out of managing a no-win property from a distance. A local investor might see this as an opportunity to add a property to their portfolio. We purchased one like this about a decade ago and it has worked out for us; even through the housing crisis it was always rented. Now with the loan balance diminished and the property value up, the spread has made us have a good return... especially since our down payment was $0.

conventional lenders can not do interest only loans anymore. The mortgage laws changed a lot since the mortgage meltdown. If your rate is somewhat high , you could look into doing a refi to lower the rate through the harp program.

Thanks everyone! Sounds like this might be a bit of pipe dream for now.

@Thomas Kayes Hi Thomas if the property is almost cash flowing with a conventional loan I wouldn't do anything right this second. While I don't like cash flowing in the wrong direction, negative cash flow, a conventional loan means fixed interest rate so hopefully that is a low one for you. The Kansas City market has been steadily improving in many areas so I suspect you might have some options sooner than later. Have you checked acutal sales comparables lately to see if you are really still underwater? If you want to keep the condo any recent higher sales may give you an opportunity to refinance as well.

Good luck!

JJ - Thanks for chiming in! I'm afraid the recent sales comps, while heading in the right direction, are still woefully under the loan balance. If we could sell it with a small hit, we probably would. 

It's heartening to hear you say that things are heading in the right direction. And we are only a little negative. I'm still tempted to shop around for a portfolio lender and see what we can get, but I'm not optimistic.

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