I have been talking to a past client about refinancing for the last several months.  The client has a beautiful home that I helped him to purchase in October of 2008.  It was a foreclose and at the time a great deal.  The current homeowners had paid $240K plus for comparable properties only the previous year.  And my client got his at $190K.  So the plan was to capture the appreciation in the next few years as the market recovered and make a few bucks from the resale.  Only problem is that the market in his area didn't hit bottom until earlier this year.

As the market was hitting bottom, he was contemplating refinancing.  After all of this time, he has gone from equity positive to equity flat - meaning the mortgage equals the appraise value of the home.  So last week he asked me how to get out from under the situation.  Here is what I suggested:

  1. If the bank will let you refinance at a lower rate even while being 'equity flat' go for it if it saves you money on the monthly payment.
  2. Consider going from 30 years to 20 years or 15 years to reduce the amount of interest spent.
  3. Once the new terms are set after refinancing, pay off as much of the mortgage as possible as fast as possible.  The mortgage company is collecting the bulk of its pay back in the first five to seven years of the mortgage.  Go ahead and make double payments and you end saving so much interest that you can feel a lot better with the value of the property.

If you cannot sell and break even, you can try to beat the bank by refinancing and making massive payments in the first several years of the new mortgage.  And you stand a much better chance of getting that money back in the long run when the market recovers for your area.

Any other ways you can think of in this situation of can't sell and break even or better but you can refinance?

    J W Group

Office 404-418-8092 Cell 404-246-3210 Fax 404-991-3770

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This post has been included in Georgia Real Estate News

5 Comments on Can You Beat the Bank? The One Holding Your Mortgage

SEP
13
2011
145,246 Points

I would love to "beat" the bank . . . beat 'em until they cry for mercy! ;-)
8:26pm • #1
367,377 Points 14 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

There are a lot of us who would.  Thanks for commenting and continued SUCCESS to you sir!
8:28pm • #2
315,107 Points 2 Featured Posts Attended Rain Camp Called Shot Master

Home owners do need to make sure that they are keeping sufficient cash reserves before making any additional principal payments.  Depleting those too much could lead to foreclosure should there be a job loss or a death or illness and there is now trouble making the payment.
9:19pm • #3
367,377 Points 14 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hey Rodney,

Good point!  Emergency savings, a year's savings equal to annual expenses, etc....you added balance to my post.  Thank you for commenting and best of SUCCESS sir!
10:25pm • #4
SEP
14
2011

Great points, Jordon - any tips or recommendations that can help our clients (and us - everyone!) save some dollars is wonderful!
2:57am • #5


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Jordon Wheeler - East Point, Hapeville, College Park, Union City, Fairburn

Fairburn, GA

More about me…

The Jordon Wheeler Group

Address: South Fulton, College Park, East Point, Hapeville, Union City, Fairburn, Camp Creek, ATLANTA, GA, 30303

Office Phone: (404) 418-8092

Cell Phone: (404) 246-3210

Email Me

Jordon Wheel…

Serving South Fulton and all of metro Atlanta, The Jordon Wheeler Group is a full service brokerage. We represent sellers, buyers, landlords, tenants, and investors. We are a HUD Certified Selling Broker, and we know the details of Down Payment Assistance in Georgia.



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