My husband and I are currently living in Bangalore, India for the next two years, and are renting our house while we are gone. We currently have a 30 year FHA loan at a fixed rate of 5.875%, and we bought the house for 132k in 2008.
Right now, we have two mortgages on the house, the original with a balance of 118k, and a second at 14k. Before we left for India, we attempted to sell the house for 145k, which would have had us come out even on the sale after closing costs, etc. For three months, we got almost no interest in the house, and not even one offer to buy. 
We did however find a couple who wanted to rent the house for 1300/month and we expect they will stay the full two years.
So, on the house right now, we have a total of 132k loan balance, but I have no idea what the "market value" of the house is, as we did not get it appraised during our three month attempt to sell the house. We did get the realtor who sold us the house to run a comparables report, and she suggested we list the house for 132 (the same we paid in 2008, which is disgusting. But I digress)
I noticed the current mortgage rates are much lower than our current 5.875, and I was wondering whether it would be worth it to explore a refinance. We would need to keep the monthly payment + escrow below the 1300/month we are renting it for, since we don't have the money to pay anything extra. Our current payment + escrow is 1200/month. Our credit scores are in decent shape, with our FICO scores at 733 and 745.
So - would it be worth pursuing a refinance, and possibly rolling first and second mortgages into one with a lower interest rate? We plan on moving back into the house after our two year stint in Bangalore. Thanks.
@Anonymous wrote:My husband and I are currently living in Bangalore, India for the next two years, and are renting our house while we are gone. We currently have a 30 year FHA loan at a fixed rate of 5.875%, and we bought the house for 132k in 2008.
Right now, we have two mortgages on the house, the original with a balance of 118k, and a second at 14k. Before we left for India, we attempted to sell the house for 145k, which would have had us come out even on the sale after closing costs, etc. For three months, we got almost no interest in the house, and not even one offer to buy.
So, on the house right now, we have a total of 132k loan balance, but I have no idea what the "market value" of the house is, as we did not get it appraised during our three month attempt to sell the house. We did get the realtor who sold us the house to run a comparables report, and she suggested we list the house for 132 (the same we paid in 2008, which is disgusting. But I digress)
I noticed the current mortgage rates are much lower than our current 5.875, and I was wondering whether it would be worth it to explore a refinance. We would need to keep the monthly payment + escrow below the 1300/month we are renting it for, since we don't have the money to pay anything extra. Our current payment + escrow is 1200/month. Our credit scores are in decent shape, with our FICO scores at 733 and 745.
So - would it be worth pursuing a refinance, and possibly rolling first and second mortgages into one with a lower interest rate? We plan on moving back into the house after our two year stint in Bangalore. Thanks.
In my opinion, it makes a lot of sense to try to refinance your home, since current interest rates are lower than your current rate. However, your ability to refinance is going to be dependent on the appraised value of your home.
Was the second mortgage a purchase money loan? Or was it taken out sometime after the purchase of the house? If it is a non-purchase money loan, then I believe that combining the two loans would have to be treated as a cash-out refinance, which is subject to different loan-to-value limits. I'm not sure about this - one of the mortgage professionals here would have better insight about this.
