CLIENT CHAT
Borrower
I have a piece of property in Martinsburg, WV that I’d like to sell.  I understand that the market isn’t really conducive for a sale at this time, correct?  And to boot, the market in the panhandle is flooded, the say the least.  However, I’d like a more professional take on the situation.  The home is a split level 4 bedroom, 3 full bath, single family w/o a garage sitting on .25 acres in the Sycamore Village subdivision in Berkeley County.  The mortgage balance is $246k.   If the market isn’t conducive for a sale, let me know if any mortgage companies are doing refi’s on 2nd homes.  I have an adjustable arm now. The house is currently rented. Thanks. R
Choice
If you’re willing to sell your home for what others are selling for currently in your area, then it’s conducive to sell.  This is something you will have to determine after researching what comparable properties are selling for, and what price you’re willing to go down to.  ..and in this market you will probably have to pay closing costs as well..Since you are renting it out now, any lender will look at this property as an investment property and not a 2^nd home.  This makes for higher rates than you would get if you were living in the property.  Mortgage balance is $246,000.  What do you think it would appraise for (conservative estimate)?  What is your current rate, when will it adjust, and do you know what it will adjust to?  Once I have these answers I can let you know if it will make sense to move forward with a refinance…  in the meantime don’t let a Realtor “list” your property or you won’t be able to refinance at all.
Client
I had a realtor in WV run comps for me about 2 months ago and they were selling homes w/similar specs for between $199k and $230.  This range isn’t an option for me because of the balance owed.  Right now there are homes in the subdivision listed from $189 – $280 some looking like mine and some a little bigger. Conservatively, I would say the home will appraise for maybe $250k – but this is a guestimation totally.  The initial interest rate was 7.8%, Feb 08 it adjusted up 2 points then down 1.45 points this month.  So now it’s just over the 7.8%.  Does the situation change if the home is rented to family, meaning could it be considered a 2nd home and not rental property?
Choice
Yeah, looks like you don’t have a choice but to hold onto it for now… and given enough time your value will come back up.   Even if a lender can get 250k as value, that won’t be enough equity to refinance an investment property.  Your best chance is with FHA because of the limited equity, but fha requires it to be your primary residence.  On the bright side, 7.8% isn’t that bad believe it or not.  Current fixed rates at 0 points are around 6.50%, and with add-ons for an investment property a lot closer to 7%. 
Client
Got it.  Thanks for the info.  I guess we’ll talk more about in a few years when the market rebounds
  Check today’s FHA mortgage rates