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Old 01-14-2013, 10:19 AM
 
55 posts, read 78,562 times
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I have a house in the bay area. The purchase price was $330K and the current loan amount is $304K. I have a 30-year loan at fixed APR of 4.25%. The loan term left is 27 years 9 months. I am thinking of refinancing to a new low rate (like 3.60% or 3.75%) as the current interest rates are low. It is not my primary residence as I am renting it out. I am currently paying $2,150 per month that includes the payment towards the principal, the interest, all the taxes and insurance premiums. The problem is that I am paying $145/month towards MIP (Mortgage insurance payment as it is an FHA loan) and I want to get rid of that but I can't for another 2 years 3 months as per the current loan. I have an excellent credit score (> 780).


1) As per Zillow the house is worth $415K but zillow's figures are not accurate I have been told. Which site would be the best to check the value of the house closest to what a bank-appointed accessor would come up to?

2) Could anyone advise if refinancing to a new low fixed rate would be better for me? I have been talking to Quicken loans and they seem to be way better than my current bank BofA. What is the best rate can I expect since this is not my primary residence? Can I claim it to be primary in anyway?

3) Typically, what would be my closing costs and how much be other fees?

4) Would buying points make any sense?

5) My budget is $20K in out-of-pocket expense. Would that be sufficient? I want to go for a conventional loan and not an FHA loan.

Thanks a lot in advance!
Q
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Old 01-14-2013, 11:12 AM
 
Location: The Berk in Denver, CO USA
14,046 posts, read 20,368,649 times
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Default Zestimates are crap

Quote:
Originally Posted by qamarfaiz View Post
1) As per Zillow the house is worth $415K but zillow's figures are not accurate I have been told. Which site would be the best to check the value of the house closest to what a bank-appointed accessor [sic] would come up to?
1. Zestimates are junk. Just ignore that number.
2. No "site" is going to give you an accurate value.
3. If you need an accurate market value in order to make the re-fi decision, pay ($400-ish) to have an appraisal done. That is the only way to get closest to what another appraiser is going to come up with.
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Old 01-14-2013, 12:10 PM
 
Location: Eureka CA
8,260 posts, read 11,124,485 times
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According to the IRS, a taxpayer has one (1) primary residence.
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Old 01-14-2013, 04:42 PM
 
1,013 posts, read 1,272,123 times
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zillow isn't accurate at all. I refinanced 6 months ago and my house appraised for 340k and zillow had the value at 256k. In this market my house would probably sell for like 380k+ but zillow still has it at like 250k.
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Old 01-14-2013, 05:20 PM
 
Location: El Dorado Hills, CA
3,693 posts, read 8,345,128 times
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You would have to get a professional appraisal to understand what your refinance value would be.

As an investor (since you rent it out), you won't get as low of rates as an owner occupied. It might not be any lower than what you are paying right now.

Call a mortgage broker and ask these specific questions.
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Old 01-14-2013, 05:39 PM
 
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Here in Florida we have a source that is upto date on the sale.

I am in the process of refinancing and I made my own appraisal using three comps. I used recomended adjustments and the appraisal came in 4% lower than my estmate. The difference is that he took two other houses than what I took. I took the recent 3 houses that are comparable to us but the appraisal decided to take two from June/July time frame than the recent ones. The third house he picked was the same as what I picked and in fact he appraised a little higher than what I estmated.

Bottom line, if you can get sales in your neighborhood, you can have an idea, where it might appraise without paying few hundreds.
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Old 01-14-2013, 06:28 PM
 
7,281 posts, read 8,880,520 times
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Get an appraisal. Since the place is a rental, the appraisal should be a business expense, talk to your CPA about that.

If you have a CPA, run it by them, they should be able to run various scenarios really quick to give you some hard numbers to work with. By this time next year 4.25 won't seem too bad. While it would be great to lower than rate right now, as a rental, your rate isn't going to get as good as for a primary.

Were you to take it as your primary residence you could refi it as such and then get around 3.3 or close to that.

If you had the opportunity and it would work for you, you could always rent out what you have now, move back in and do the refi. A lot would depend on what your CPA and tax attorney have to say, if you have them.
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Old 01-15-2013, 10:33 AM
 
386 posts, read 680,776 times
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1. Quicken Loans use to charge points and / or upfront fees. You would probably be better off using an independent mortgage broker.
2. In order to avoid PMI, you normally need 20% equity in your house on the refi or purchase.
3. If the house is not your primary residence, you will fall under the income property provisions. You will also pay a higher mortgage rate and in most cases, the loan requirements (at least on purchases) is 30% down payment but you will no longer be subject to the PMI.
4. Current appraisers charge approximately $400-500.

I'm by no means an expert on this. I highly recommend that you should talk to a CPA or accountant if you have rental property. And I would shop around for refinancing. You may also want to go direct to Wells Fargo. They are currently the #1 underwriter of mortgages in the country right now.
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Old 01-15-2013, 11:18 AM
 
9,628 posts, read 5,951,774 times
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Here's some things to consider:

1. You probably bought the home as a primary residence, moved out, and rented it out. Your house is now an income/investment property because you are now renting it out and you don't live there. Bank requires much more down payment for an income property, some lenders told me they require as much as 50% before they would finance the loan and the interest rate will be higher. Different lenders will have different rules about this because this type of lending is not protected by Fannie/Freddie. You need to do homework on this.

2. You could lie and say it's your primary residence, in which case, you still need a 20% down payment, meaning you can borrow no more than 80% of the value of the house - so you still need to bring money to the table. Or you could refinance via FHA again as a primary residence, maybe. I've never used FHA so not familiar with it.

3. Zillow is crap. If you want to know approximately how much your house will be appraised at, go to redfin.com, search for sold homes within a few blocks of your property within the last year and do a comparison. That's what 90% of the appraisers do.

4. Work with a broker instead of one of those too big to fail banks, they usually can find a lender who gives you a discount on the closing cost. My last two refinances, I paid $0 for closing.

Last edited by beb0p; 01-15-2013 at 11:28 AM..
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Old 01-16-2013, 09:38 AM
 
55 posts, read 78,562 times
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Quote:
Originally Posted by beb0p View Post
Here's some things to consider:

1. You probably bought the home as a primary residence, moved out, and rented it out. Your house is now an income/investment property because you are now renting it out and you don't live there. Bank requires much more down payment for an income property, some lenders told me they require as much as 50% before they would finance the loan and the interest rate will be higher. Different lenders will have different rules about this because this type of lending is not protected by Fannie/Freddie. You need to do homework on this.

2. You could lie and say it's your primary residence, in which case, you still need a 20% down payment, meaning you can borrow no more than 80% of the value of the house - so you still need to bring money to the table. Or you could refinance via FHA again as a primary residence, maybe. I've never used FHA so not familiar with it.

3. Zillow is crap. If you want to know approximately how much your house will be appraised at, go to redfin.com, search for sold homes within a few blocks of your property within the last year and do a comparison. That's what 90% of the appraisers do.

4. Work with a broker instead of one of those too big to fail banks, they usually can find a lender who gives you a discount on the closing cost. My last two refinances, I paid $0 for closing.
Thanks a lot, Beb0p. I also realized Zillow is crap. $0 for closing sounds great. Would you happen to have contact details of the broker you dealt with?
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