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Posts Tagged ‘refinance house’

Have you tried to finance or re-finance a property lately? It’s a different world. A reader’s question featured in the Benny Kass column wondered if the lenders would laugh in their face if they applied for a home equity line. Since all they have in equity is the down payment they made a year ago, it would be pretty tough to get a line of credit on that property. Hopefully their broker won’t laugh in their face as well.

I’ve recently talked to a mortgage broker as well. I wanted to refinance some land and I also have an ARM on a duplex that is expiring in October. I have the ARM at a great rate, 5.6% however unfortunately that kind of a rate is not available now, ARM or no ARM, for an investor. Homeowner rates are the highest they have been since September, 30 year fixed is at 6.42% and 5 year ARMS are at 5.89%. Since investor loans are at least a point more, I’m likely looking at a 7% loan which means a higher payment. So I have to decide whether to sell or absorb the higher payment. It’s a close to breakeven property.

Lenders will no longer finance land at a 80% LTV. They will only consider loans at 65% or 70% LTV for land. With the loan I currently have, it is at best 75% LTV depending on what the appraiser would say. So in that case I would have to come to the table with money.

It was not a very encouraging conversation, certainly not much in the way of options. I commented to the broker that he must have heard many stories like mine where we are stuck with negative cash flow property that is tough to refinance and that puts us in a tough spot. His answer was memorable, at least to me, “Actually, you are a success story”. Eeek, since I’m not feeling like a success story at all, I really feel for the “failures”.

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