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Question-Short Refi (keep the house??)

November 13th, 2013 at 03:47 pm

hi all,

Quick question.

1. Do I do the short refinance on my house or let it go? All responses welcomed.

1. I can do a short refinance on my house for $302k, initial rate of 6.75%, payment $3200. $11,000 down
2. I can immediately refinance this (already checked) to 3.65%, $2400 a month
4. house worth $400-$410k
5. I have already filed for BK Chapter7 years ago so the house is off my credit report. If I 'let it go' it will be sold by the bank but have no impact on my credit. I have 2 years for that to occur but it will be stressful on me.

1. no stress of not knowing how long I have the house
2. good deal on house
3. I need to live somewhere. I am not going to find somewhere for this much in the area I live in and rates may go up and I will have to have a significant down payment
4. house has been well maintained .. new roof, furnace etc and is 'known'
5. maybe get some house value appreciation as homes go up again
6. excitement of being able to 'live in the house' again. I feel like a boarder now and do not do much to fix it up etc. I guess thinking of having 'a' house or 'this house' fills me with excitmeent and joy. I have lived with instability for so long

1. I will significantly cut into my ability to save with picking up a house payment now if I do not increase my income to make up for this extra expense. I had not planned for one for 2 years more
2. Cut into savings now with the $11,000
3. I have a LOT in the air and things are stressful right now (one house not rented, just put $12k into a rental and =the 6 homes and 3 units are new to me still,though fully managed)

Mitigating factors. I can likely pick up extra cash with my side work to offset part of the cost. $1-2k). I expect an uptick in energy etc and joy witih being 'settled'

Thoughts guys?

My heart goes with the house (and my accountant says it makes sense). My fear is that I am feeling unstable now.. though we have 4 showings for the house this week. If hte house was rented and I have more savings I would feel much more at ease

8 Responses to “Question-Short Refi (keep the house??)”

  1. momcents Says:

    No time to go through past posts. What is the debt to income ratio from your salary to the house payments (both pre- and post- refi?)

    You've gone through this trouble to keep the house. I would say try to make it work before you decide not to.

  2. Rachael777 Says:

    to the point. I like that. I need logic right now

    34% debt to income at iniital refi (6.75)
    26% debt to income at 2nd refin (3.75 or similar)

  3. Petunia 100 Says:

    The house is worth about 400k, and you owe 302k? How is that "short"? What am I missing? Why would you "walk away"? Wouldn't it make more sense to sell and pocket the equity?

    Why do you need to refi twice? Why can't you just have that 3.65% rate and refi only once?

  4. momcents Says:

    After the second refi, I think that it is doable. At you are maintaining the $100K (est) equity that you already have. Why walk away from that?

  5. Rachael777 Says:


    I am currently not making payments on the house so I am danger of losing it. The house is majorly underwater. A short refinance is a niche loan (with niche rates) for folks like me who want to buy the house back from the bank (at below market value with higher rates) vs doing a loan modification. My house is underwater so if I do not do this 'niche'high interest rate' loan I will let the house go. A loan mod is not worth it with it so far underwater. So the niche loan itself provides the equity which Yes I will retain if I do the short refinance (and later refinance to market rates). So it represents a real opportunity for me.

  6. Petunia 100 Says:

    Oh, I see. Well, if you can come up with the cash, it looks to be a very profitable thing for you to do. Even if you don't want the house, this deal gives you equity. Is there a minimum time afterwards that you must own the house before you can sell and keep the equity?

    Are you living in the house now? If you don't take the deal, where would you move? How much would you expect to pay in rent? Or perhaps, lose in rent if you were to move in to one of your rentals.

  7. Rachael777 Says:

    I can sell at any time and your point about 'where would I go' was exactly my thought

    1. A comparable rental house would be at least $2400
    2. I would not move into my rentals as I want to live in Naperville, Most of my rentals are small homes in Joliet. I only have one in Naperville which again I do not want to move into and would need to downsize (get rid of stuff to do so).. big change in life style

    If I bought at $315 now I would be also downsizing either size or area and would be buying a house with a potentially different configuration which would mayu require different furnishing... also may require other new house things (window treatments, appliances etc) and may come with unknowns or knowns (like older roof or mechanicals)

    I think it makes sense to stay and talking it out SUPER HELPED. thanks guys.

    I should hear on the refinance in the next week.


  8. TashaC. Says:

    I am guessing you already have money invested in the house. (down payment when you bought it, mortgage payments, upgrades). So if you can keep that money by keeping the house- I would try to not let that money go. Also if the house will have instant equity when you short refi then you also have some money locked away there. I'm not sure why they are giving you a sky high interest rate and telling you to refi to a better rate immediately. Is the bank making a ton of money by making you go through a mortgage refi-type process twice? Why not give you a good rate off the bat?
    If you can afford the payments WITHOUT refinancing the loan (because you never know), then keep the house- I would think in the long run you would be better off. But if you are asking this question because you just. cant. make. the. payments then let it go now as opposed to 6 months from now and relieve yourself of the burden.

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