Orlando Mortgage Blog

Today's Case-Schiller report showed the National Home Price Index rose 4.4% in Q2 2010, but many believe they will continue to fall as much as an additional 6-8%, due to high unemployment and ongoing foreclosures building the supply ever higher, only to bottom in 2011. All well and good, but there are those that are on the equity cusp in every market today related to whether they will be able refinance their mortgage. If you are one of the lucky folks that put enough down when you bought your home, never took that HELOC 2nd mortgage, simply have been in your home long enough not to be impacted by the boom and bust values in the middle of this decade, have already refinanced, simply never got around to it or may even be considering refinancing again after a couple years because rates have hit sub-basement levels again, don't feel alone, even the so-called mortgage insiders never expected to see rates like these in their lifetime (I'm in that crowd).

What am I talking about? Well folks if you are in a home that drops in value another 6 to 8%, that's another $6,000 to $8,000 per hundred thousand in value. So let's say you have a $200,000  home (today's number) and your current balance is around $150,000. You'd still be able to do a conventional refinance today rolling your costs and prepaids into the loan so as not to bring any money to closing and keep your new balance below that magic 80% so you didn't need PMI. But, let's say you wait and values continue to drop another 6% by the time you get around to it. That $200,000 home is now worth $12,000 less or $188,000. The same loan above with standard closing costs and prepaids rolled in would put you at 82.98% financing now and require PMI adding nearly $42.00 a month to the payment and most likely putting a heavy hit to any advantage you might realize from a lower rate and extending the recovery time on your new costs derived from your payment savings the lower rate buys you. 

Many of our neighbors in every neighborhood have found they waited too long and the equity train already passed them by. It's said that as many as 40% of Central Florida homeowners are underwater right now, meaning they owe more than the current value on the home. Now, if you have a second mortgage whether it's fixed rate or HELOC it will worsen this effect of course. But, you may still be able to refinance the first and subordinate the second back into second position giving you some respite. That's where we can help you work through the information weeds. Information is free. An appraisal will be the final determining factor of course and really your only risk to find out. So, there's certainly no time like the present to lower your payment if values continue to go south. Procrastinating can truly cost those of you who "still can" refinance thousands, if not lock you out altogether. So don't wait too long. I see it almost daily and that's unfortunate for them and us. It's a few minute call. What are you waiting on?

Plus you may also be able to take advantage of the HARP no PMI refinancing program for those already over the 80% mark. Click the 105% button in the left column for more on this valuable program.

For more on today's report: Click here.