Primary home turned to rental property

[BrickWall]

I bought a primary home in Arkansas in 2006. My financing company is chase with interest rate of 6.5%. I pay about $1,150/ month with taxes and insurance.

A few years ago, I moved to PA for a better job. As I was not able to sell my house, I have rented it for $850 / month. My house is currently worth $120K but I still owe $150K.

I have tried to take advantage of home loan modification program with chase. However, my application was denied twice. My current loan to value ratio is 1.25.

If I can lower my payments on the Arkansas home, then I can afford to buy a house in PA. Any suggestions on how I can lower my payments? Is refinancing a good idea for me?

Thanks!!

[Evan Bedard]

Welcome and thanks for joining the community.

Yes if you can qualify for a refinance that would definitely be a good route to go with. Since you are underwater the only refinance program available is the Home Affordable Refinance Program (HARP) and to qualify your mortgage must be owned by either Fannie Mae or Freddie Mac. Below are a few basic guidelines for the program and links to help you find out if either entity owns your loan..

You may be eligible for HARP if you meet all of the following criteria:

• The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.
• The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.
• The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.
• The current loan-to-value (LTV) ratio must be greater than 80%.
• The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.

*Eligibility criteria are for guidance only. Contact your mortgage servicer to see if you are eligible for HARP.


Ask your mortgage servicer (the company to which you make your mortgage payments) if they participate in HARP. Not all mortgage servicers do. Contact Fannie Mae or Freddie Mac for help in determining if you may be eligible for HARP.
Program ends December 31, 2013.

[BrickWall]

Thank you for the response. I have spoken with a chase representative. He told me that my loan can be refinanced for 30 years with 4.625 interest rate and 4.734 APR and 0.375 points. This will reduce my monthly payment by $200, however, I have to pay $2,700 as a closing cost.

Is this a good deal?

[Evan Bedard]

Thank you for the response. I have spoken with a chase representative. He told me that my loan can be refinanced for 30 years with 4.625 interest rate and 4.734 APR and 0.375 points. This will reduce my monthly payment by $200, however, I have to pay $2,700 as a closing cost.

Is this a good deal?

That is a decent deal, but you may want to shop around before choosing which lender to go with because you may be able to score a lower interest rate than that..