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Real Estate = Real god damn it all

XaquinXaquin Right behind you!Registered User regular
edited January 2008 in Help / Advice Forum
I couldn't think of a word that rhymed with estate that fit the bill.



ok, I'm putting my house on the market at what I already know is the worst time ever.

My property tax went up 10% last year and combine it with the fact that my fiance' was out of work for a while, put such a strain on my bank account that I need to sell asafp.

I decided to (since I'm selling anyway) to refinance to an intrest only loan (cutting my payment from 1,795 to 1,306 a month) (and allowing me to pay for my upcoming wedding).

I've always heard that intrest only is bad because you don't build equity .... but as I'm selling asap, will I miss out on that much?

I feel like I'm doing the wrong thing even though the numbers look right.

If I sell in a year I'd miss about 2,000 in equity, but will save 5,000+ from lower mortgage payments (according to my lender)

Is this right?

It seems too good to be true, but if it is then it would be a lifesaver.

has anyone been in my shoes?

can they advise me how badly they stink?

edit: effing typo in the title =/ (fixed)

Xaquin on

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    DaenrisDaenris Registered User regular
    edited January 2008
    Well, if that's what your lender says it's probably right. However, you're not really "saving" money exactly. I mean, you'll have the extra money now since your interest payments are lower, but you're paying less on your mortgage, so when you end up selling the house you have to pay that much more on the mortgage out of the amount you sell for.

    Daenris on
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    XaquinXaquin Right behind you!Registered User regular
    edited January 2008
    Daenris wrote: »
    Well, if that's what your lender says it's probably right. However, you're not really "saving" money exactly. I mean, you'll have the extra money now since your interest payments are lower, but you're paying less on your mortgage, so when you end up selling the house you have to pay that much more on the mortgage out of the amount you sell for.

    true, but I already have around 100k in equity, so a future down payment shouldn't be hard (especially since we want to downsize a lot).

    Xaquin on
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    DaenrisDaenris Registered User regular
    edited January 2008
    well, it sounds like a pretty cut and dry situation. If you're definitely selling, and think you can actually sell within the year, then you might as well be paying less on the mortgage while you have this house.

    Daenris on
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    XaquinXaquin Right behind you!Registered User regular
    edited January 2008
    awesome, thanks

    Xaquin on
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    QuothQuoth the Raven Miami, FL FOR REALRegistered User regular
    edited January 2008
    Good sites to check out:

    http://www.realtor.org/
    http://www.realtor.com/Default.aspx
    http://www.zillow.com/

    That way you can get an idea of how long it's taking for homes to sell in your area and how much you should probably sell for. If you get a realtor, they'll probably do all the work for you, but at least this way you're more educated.

    I appraise real estate so I know things. Like, at least two of them. :)

    Quoth on
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    EggyToastEggyToast Jersey CityRegistered User regular
    edited January 2008
    What are the closing costs for refinancing? That's the only thing missing from the equation. If it's free to refinance, then yes, it is a good idea. Similar to how getting an ARM loan is great if you only plan on living somewhere for 3-4 years, because you're paying low interest while you live there and then pay off the mortgage once you sell it.

    Here's the catches -- you need to make sure you can sell the house for enough to at least pay off the mortgage. Being "upside down" means you will still owe the bank once you sell the house, and that's not good if you're interest only. If your house has appreciated some, then yes, having money in your pocket today, via an interest only mortgage, is better than banking on money in your pocket when you sell, because you WILL save $5k in interest. You may *not* earn 2k in equity.

    Just remember that switching to an interest only means you should start working towards selling the house -- don't sit on the property at that point. I would suggest talking to a realtor and asking about possible fixes on your house, and using that extra money each month to make those happen.

    It's not a bad time to sell a house, it's just not a good time. Houses still sell in many parts of the country, and for a fair price. There's just no craziness left, so a good house will sell for a reasonable price. So check the closing costs on the refi, and then tell your gut to shut up. And start going through the motions of selling the place.

    EggyToast on
    || Flickr — || PSN: EggyToast
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    XaquinXaquin Right behind you!Registered User regular
    edited January 2008
    It'll be on the market by next friday and we've already made all repairs that have to be done to be able to sell the thing.

    Now we just cross our fingers.

    Xaquin on
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