Yesterday I called Bank of America to see whether it was worth my while to look at refinancing my current mortgage. I had refinanced a couple of years ago to a 5% mortgage and it seems like rates being advertised around have been around 4% for quite some time, but with closing costs and fees I wasn't sure it would be worth refinancing.
I was transferred to a guy and he said he would check it out. He put me on hold and said that my loan was more than my house was worth by about $6000 and 5% is a good rate and rates were actually more like 4.5% now. He also told me that if I refinanced my house and wanted to avoid a PMI payment, I would have to come up with $37,000 additional.... like another down payment to make my loan to value less than 80%! Un-freaking-believable!!
When I purchased my townhouse in 2002 I put down 15% and eliminated the PMI even before refinancing in mid 2009. I'm no idiot so I do know that home prices have gone down some, but there is no way this house is worth nearly $30,000 less than I paid for it nearly 10 years ago. My neighbors bought their unit a year or so ago for more than I paid, so I assumed we had a lost decade of real estate value and I'd just have to wait for the market to rebound in a couple of years. So much for rebounding.
Then I remembered that I had read or heard something about Bank of America and other big banks using their own appraisers who low-ball the appraisals and people weren't getting home loans. I think this is what is going on. Apparently, they purchased an appraisal company which they use exclusively and the BoA guy I talked to on the phone gave me a number almost instantly. After I was off the phone I checked Zillow and the value they had posted for my house was much more realistic (about $36,000 more than the estimate BoA had given me). That was a relief. I know I have very little, if any equity in my home at this point and will probably have to wait before selling or else I'll end up paying or short selling, which I certainly don't want to do.
I do like owning my own place and it would cost just as much to rent a 3 bedroom in my town or the northside of Chicago. As much as I don't want to spend another winter in Chicago, it looks like I'm going to have to. bbbrrrrrrrrrr
I shamelessly love money...cash, gold, silver...whatever I can get my paws on. And when I get it I'd like to keep it, thank you. This is my blog on money, frugality, getting out of debt, couponing, silver and gold, saving and investing. In these uncertain economic times I am educating myself on personal finance matters, getting out of debt, and taking the necessary steps to improve my financial situation.
