Refinance on low-balance condo investment property

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Refinance on low-balance condo investment property

Postby blu9535 » Wed Dec 26, 2012 5:48 pm

Long time reader, first time poster (I think).

I have a current mortgage on a condo that I once lived in, but is now a rental property. The condo would likely be appraised at about $120,000. The current balance on the loan is $86,000 (72% LTV) and the current interest rate is 4.75% for a 15 year term.

I'm finding it impossible to get a decent quote for a refinance using any of the online sources I've looked at. The criteria would be...

  • an APR that is enough below 4.75% to be attractive for a refinance
  • low closing costs
  • no points
  • no cash out
  • can be 15 or 30 year term, or any fixed term
  • for a condo investment property
I've checked most of the banks and referral sources that people have mentioned here (PenFed, Amerisave, etc) and none of them appear to offer a product for my situation that fits the above criteria.

I realize that there's a gray area as far as me claiming this is actually owner-occupied and not a rental. I was hoping to stay out of any gray areas if possible.

Any recommendations? Thanks so much and have a merry Christmas.
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Re: Refinance on low-balance condo investment property

Postby Valuethinker » Thu Dec 27, 2012 2:12 am

I cannot advise you (UK based) EXCEPT to note that to claim to be an owner occupier, when you were in fact renting it out, would probably nullify the mortgage contract, as well as your insurance. Something to avoid.
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Re: Refinance on low-balance condo investment property

Postby gerntz » Thu Dec 27, 2012 8:32 am

Don't know why a condo would be harder to get a loan on than our duplexes are. We're getting owner-occupied rates + 2 points. For 15 year, the rate is under 3%. The points add to the effective rate of course but aren't that big an effect. The loan process is a real pain. Don't think it's due to us not occupying but just what a pain getting any mortgage is today. They're paying out quickly vs. our existing 4.75-5.0% loans. These are regional savings banks we're dealing with, not online.
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Re: Refinance on low-balance condo investment property

Postby lavenchy » Fri Dec 28, 2012 8:45 am

First, I don't see any gray area in your situation. Based on your post, this is a rental property - the fact that it was a primary residence notwithstanding.

With respect to refinancing, have you broached the subject with your current lender? You should try to get a good faith estimate from them if you haven't already done so. Otherwise, I would recommend Wells Fargo for a 15-year loan term and property classified as an investment property. If the appraisal truly comes back such that your LTV is 72%, then you should be looking at a rate below 3% for a 15-year loan term with Wells Fargo (other things being equal - good credit, sufficient emergency cash, low debt, etc).

Good luck!
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Re: Refinance on low-balance condo investment property

Postby blu9535 » Fri Dec 28, 2012 4:40 pm

Current lender is Bank of America. I don't like the idea of paying points because I don't have a good idea of how many more years I will own the property, but maybe it's unavoidable. I might discuss with Wells Fargo and see what they say. Thank you for the recommendation.

I suppose banks have good reason to shy away from rental condos with sub-$100,000 balances... perhaps the banks think they are more likely to lose their value over time, or otherwise the loans just aren't worth the risk to them.
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Re: Refinance on low-balance condo investment property

Postby bdpb » Fri Dec 28, 2012 5:01 pm

There may be other options.

Do you have assets in a taxable account? Use them to pay off the loan.

Do you have equity in your current home? Borrow against it and pay off the loan.
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Re: Refinance on low-balance condo investment property

Postby Skyler » Sat Dec 29, 2012 2:27 pm

bdpb wrote:There may be other options.

Do you have assets in a taxable account? Use them to pay off the loan.

Do you have equity in your current home? Borrow against it and pay off the loan.



I am in bit of a similar situation - I do have equity line of credit and I am quoted 3.25 % ( my current interest rate is same as yours -4.75% ). 3.25% is for a 5 year fixed rate on the equity line. You might want to try this option as bdpb says. This was from Digital federal credit union.
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