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Adventures in Refinancing, Chapter 1

October 10, 2011 by MMD Leave a Comment
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I’ve recently decided that I should take a hard look into getting a home refinance loan. Home interest rates are the lowest they have ever been in history and I need to take advantage of this opportunity before it is too late.

However, the road may not be easy given how much I still owe on my house and what I think it is worth. I feel a lot of people are probably in this situation and curious about what options they may have.  With that said, hopefully you find this series of posts useful towards your own efforts.

These are the facts about my current situation:

• I currently have a 30-year fixed interest rate mortgage at 5.75%.

• My remaining mortgage balance is approximately $142,000.

• I do not know the current value of my home. According to the estimate that comes with my state taxes, it is somewhere around $134,000.

• I am 7 years into my mortgage with no late payments or any other issues.

• Great credit rating.

Looking ahead to the challenges I may face, I believe there will be two large hurdles to cross:

1. If my house is worth less than what I still owe, I will not qualify for any decent rates and I probably won’t be able to refinance (at least in a way that would benefit me). If this is happens, these posts will make for a very short adventure story!

2. If my house is worth more than what I owe but the loan-to-value ratio is still very high, then I’ll have to weigh the benefits and consequences. Most importantly, the fact that I would owe a ton of PMI (principal mortgage insurance). Even if my principal and interest payment was lower, having a high PMI payment on top of it may not make it worth the trouble.

So my adventure will first begin by contacting some banks and mortgage companies, and seeing which ones will even work with me based on the information above. As I make some progress, I’ll report back with updates.

Go to the next chapter ….

Table of Contents:

Chapter 1, Chapter 2, Chapter 3, Chapter 4, Chapter 5

Photo Credit: Microsoft Clip Art

Filed Under: Mortgage & Refinance Tagged With: equity, home loan, house, mortgage, PMI, principal mortgage insurance, refinance

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