Refinacing condo now...problems in buying a house in 2010?

airforceguyOctober 12, 2009

Hello again. Situation: Looking to refinance our condo. Either to a 5/1 Arm or a 30 yr fixed, under the "Homes made Affordable" program. Leaning towards the 5/1 arm as we only plan to rent the condo out for a maximum of 5 yrs. (figure the market will improve in the DC area by then, We live in VA) We are fortunate that we owe less than what the condo is worth, but the condo has decreased in value a lot, thus why we will rent it out. What we can get from the rental, we should almost be able to break even,especially if we refinance to the 5/1 arm

Our main concern is that we want to purchase a house in MD sometime in early 2010. So will refinancing our condo mortgage cause us any problems in getting a new mortgage on a house in MD?

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landmarker

If you were currently a renter would you be considering buying a condo to rent at a loss every month and at the same time buy a hoouse? Investment decisions should be forward facing and not backward facing.

Also, if you are financing a rental, a fixed rate is a more rational option. This will eliminate the possiblity that you are forced to sell at a point in time (5 yrs in the future). Why have that hanging over your head.

    Bookmark   October 12, 2009 at 1:00PM
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airforceguy

We currently own the condo--not looking to buy a condo, mortgage that and buy a house! Were moving to MD to be closer to work. renting our condo should not be a problem as it is close to the metro.

We plan on selling within 5 yrs, so why not go with a 5/1 arm? Unlike many, we are not upside down on our mortgage. just dont want to loose a lot of $$, thus rent it out and hope within 5 yrs things get better.

BUT our main concern is if refinancing our current condo will cause us any difficulties in obtaining a mortgage for a home in MD?? thanks

    Bookmark   October 12, 2009 at 1:07PM
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Billl

Rental properties are not included in the program. Here is a blurb from their FAQ.

# I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for a modification under HAMP?

No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible to be modified under HAMP. If you used to live in the home but you moved out, the mortgage is not eligible. Only the first lien mortgage on your primary residence is eligible. The servicer will check to see if the dwelling is your primary residence. Misrepresenting your occupancy in order to qualify for this program is a violation of Federal law and may have serious legal consequences

    Bookmark   October 12, 2009 at 3:01PM
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airforceguy

We would be refinancing the CONDO,in which we live in right now! Refinancing would take place very quickly, like locking in next week!

What we are trying to determine if we refinance our condo NOW (which is our prime residence) if in early 2010 we try and buy a house, is refinancing our condo now, going to cause any hassles for us to get a normal conventional or FHA loan.

    Bookmark   October 12, 2009 at 3:25PM
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dave_donhoff

Hi AFG,

What we are trying to determine if we refinance our condo NOW (which is our prime residence) if in early 2010 we try and buy a house, is refinancing our condo now, going to cause any hassles for us to get a normal conventional or FHA loan.

Sweet & simple answer; Nope!

You're cleared for takeoff!
Dave Donhoff
Leverage Planner

    Bookmark   October 12, 2009 at 6:35PM
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bethesdamadman

landmarker: "If you were currently a renter would you be considering buying a condo to rent at a loss every month and at the same time buy a hoouse? Investment decisions should be forward facing and not backward facing."

airforceguy: "We currently own the condo--not looking to buy a condo, mortgage that and buy a house!"

Airforceguy, I think you misunderstood landmarker's comment. Hypothetically, if you didn't currently own your condo, would you go out and buy it today at its current market value and lose money each month renting it out in the hope that it would increase in value over a five-year period so that you could sell it at a higher price? If the answer to that question is no, then you really shouldn't hold onto the condo in the first place and should consider selling it now.

Landmarker was saying that you have to look at investments going forward and not think about what it was worth a few years ago. If you can't get positive cash flow out of the unit and it is costing you X amount of dollars each month, then you should consider selling it rather than hoping that the condo market will turn around in 5 years. (Which is an iffy proposition by the way.)

    Bookmark   October 13, 2009 at 10:50AM
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airforceguy

Yes understood that and we have thought about selling

Wife had a frustrating day with Suntrust today! We had given them all our info and we told them the WHOLE situation, that we wanted to refinance our condo that we own (and have the mortgage with them) and then buy a house in MD in early 2010. When she talked to them on Friday everything was fine,not the case today! Suntrust has a clause in their mortgage contracts that one must live in the residence for at least 1 yr after refinancing. On Friday he stated it wasn't a problem, not the case today! Plus i guess a few other issues!

    Bookmark   October 13, 2009 at 5:08PM
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