Strike two

Heading advise from our financial adviser Royce and I set out to re-finance our mortgage.  Given the current rates and the instability of them staying low we figured why not.  We tried last July, but our house didn’t appraise for what we needed it to.

This time we thought we had it in the bag.  In July of 2009 our house appraised for $500k; figuring it would appraise for that (or above that since the market here has been gaining) we set out with enough cash in our pocket to get our mortgage balance down to $400k (80% of $500k). We locked in a nice 5.125% rate and even our mortgage lady thought we would appraise for $525k given last July’s result.  We oo’ed and ahh’ed over our proposed new payment; nearly $1300k less per month than we are paying.  How sweet would that have been!  How sweet indeed.

But we failed, again.  We found out yesterday our appraisal came back at $470k.  It hurt, I was ill, angry, I wanted to throw something.  I cried.  We obviously don’t have enough cash floating around to get our balance down to $376k (80% of $470k).  So yet again we are stuck in this piece of crap mortgage that our lender said we would never be in this long because “no one stays in their first home for more than 3-4 years”.  Well lady; we are going on 4 years and in another year our stupid rate re-sets.  Although, if our rate reset today we would have a lower rate than we signed on to in 2006 so here is to hoping in Sept 2011 interest rates are still as low as they are today.

I’m curious to get the appraisal results in  hand because it really doesn’t make sense (this is the bargaining stage of Kubler-Ross 5 stages of grief).  I know of two homes in the neighborhood that we are larger than AND we have a garage/driveway, and they sold for $540k…something isn’t right. I seriously wonder if she calculated our square footage appropriately…she was a bit lazy, I had to show her the second full bath because she missed it during her walk-through.

I have few regrets in life; but buying this house with the type of mortgage we took on is defiantly one of them. I’m actually afraid to try for a third time because it will either the “the charm” or “you’re out”.

Comments

  1. That. Seriously. Sucks.

    Although one thing thtbu have learned from working on mortgage cases an mortgage bankruptcy cases is that if you had an offer on your house at $540k, it would have appraised for $540k. All fair market value really is is the price a willing buyer will pay a willing seller in an arms-length negotiation. That’s why I didn’t even think about getting our house appraised before we put it on the market–the chances of it raising our final sale price were slim to none but the chances of an appraisal without an offer lowering our sale price were pretty high.

  2. midwestkids says:

    Back in the hay day that was what it was like here too; the lender just told the appraiser what to appraise it at (the offered price).

    But now it’s drastically changed. The lender sends a request for an appraisal through some website and they have no idea who comes out and when. Like wise the appraiser doesn’t know who my lender is, or the asking price for the house. When the apprasial is done it’s submitted via the blinded website and my lender pulls the result from it.

    I’m not sure if this practice is nationwide or if it’s just a MD thing. Most people before they put thier home up will get an apprasial just to make sure they aren’t putting their house on the market for a price a bank wouldn’t accept due to a low-ball appraisal.

  3. Well that’s just icky. Our house is being appraised on Monday — let’s hope we don’t have any issues!

  4. Have you tried ‘shopping around’ with different lenders? I’d imagine that if you’re trying to refinance with your original lender, they would be highly motivated to keep you in your original loan, which sounds like a 4 or 5 yr. ARM. Maybe a local bank, or an independent mortgage broker? A smaller bank willing to keep the loan in-house might be more interested in gathering your cash upfront and happy to lend to an obviously reliable young couple. Just a few thoughts; I have no idea what you’ve been through so far.

    • midwestkids says:

      We thought about it, but there isn’t much to shop around for anymore. Your rates are based on the amount of money you are borrowing and your credit score – no fiddling there. And the appraiser isn’t associated anymore with the lender (see my reply to Katie’s comment above) — So regardless of who we get the $$ from our outcome would be the same since the appraisal process is a blinded process now. Our financial adviser told us that as long as our current lender is responsive (she is) and we have no issues with them (we don’t) that changing lenders wouldn’t help us any since everything is so ‘regulated’ now thanks to the housing crisis. I guess some lenders may charge a lower re-fi fee than our current one but for $500 (which we get refunded if we can’t refi) it’s not worth the headache of shopping around.

      It’s really amazing the paperwork and monetary verification is required now for a loan compared to when we bought the house in 2006!

  5. Leslie says:

    It is amazing; this sounds quite different even from when we refinanced, which was within the past year. It just sounds impossible; I’m so sorry you’re having to deal with this headache. Do the appraisers even step inside? Do they know how much work you’ve done? Like you said in your post, it just doesn’t sound right. I sure hope something happens to make this work for you!

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