There’s no shortage of sellers trying to hold out for a higher sale price for their home. Likewise, there is no shortage of those wanting to refinance opting to hold out for the fathom “lowest of lowest” interest rates.
Take this example: A home for sale at 6 Douglas Lane, Lumberton, NJ lost approximately $11,000 in value in the 30 day period ending July 2009. So, potentially, the seller lost $11,000. Holy cow!! Gambling with our homes is simply not a good idea. And that’s what we are doing when we continue to wait for the market to go where “we” would like for it to go. I can’t count the number of homeowners I know who have used “waiting” as a winning strategy and lost. Actually I could count them, but it’s far too much work.
Those who want to refinance and choose to hold out for lower rates face perhaps a worse crisis. All homes must be appraised for value. Doesn’t matter if you are buying or refinancing. If you are refinancing and your equity in the home is borderline close to 20%, waiting could catapult you out of the market completely. Not only might your value fall, but if rates climb, you are hit with a double whammy. Not to mention if your credit score also drops, it is doom and gloom.
Here are just a few situations that will stop your mortgage closing from moving forward or change your financing terms:
- Home value drops too low
- Credit scores drop
- Notice of job loss/layoff received. Employment will be verified up until the day of closing. No more job. No more loan.
- Overtime (OT) at work is cut back or discontinued – where OT was needed to qualify. (This happens frequently.)
- Mortgage programs change or get eliminated
- Interest rates change
- Qualification criteria change
Regardless whether you want to buy or refinance in this market, be smart. Use your head. If you have a transaction in front of you that is doable and makes sense, then get it done. Waiting can be suicidal.
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{ 6 comments… read them below or add one }
your right. i got caught like this. i needed to pay some debt to qialify, but house dropped value and rates went up. nothing we could do. wish i had been warned. oh well.
i just sent a message about not being able to do my refinance because of my house value. my loan is FHA and was told the hghest loan i could get is 85%. is that true? is there anything i can do now?
@Mister gg, keep your eye on the market. In many communities, there are signs of rising property values. You didn’t mention how long ago this was. Are you in New Jersey? Give me a ring. Will see how things look now.
@mister gg, I missed this follow up post from you earlier. Yes, FHA maximum cash out was once 95% – earlier this year in fact. It was reduced to 85% – announced as a temporary neasure during the housing price decline. Again, give me a call for a short consultation and I will let you know your options AND see what can be done down the road if we’re at a roadblock.
one thing i’m curious to know is if we can trust the realtor to give us the best advice. maybe she wants to hold out for the higher selling price and is coaching us to her wallet. so many peeps involved with thier own agendas
@kp. Realtors are in the same position as everyone else these days. There is trouble selling homes. Realtors have an obligation to present all bonafied offers to the seller. The seller may turn it down, but I assure you the realtor wants to sell the home. Not only that, the additional commission earned from a mere $15,000 extra in the selling price (just an example) is almost nothing to speak of. Assuming the theory could be true, at 6% commission, we’re talking about a difference in commission of $900.00 – and very little of that might fall in the hands of the selling realtor. If it has to be split 4 ways, then imagine holding up a sale for $225.00? Won’t happen. If you’re selling your home, wish you luck. Don’t worry about this happening.