$841 a month on a $85K loan???

Question

We've recently refinanced and although we've added escrow, taxes etc. into the loan, it still seems a bit high.

Should we fix it up and sell it for $110K-(appraised at 105 before all the work was done) and build new or stay and deal with the high payment?

It's an old house with charicter but too many things could go wrong in the future / plumbing etc.

Answer 1

Well, your principal and interest alone account for about $560 a month on that. Don't know if you have PMI, which will add more. Without knowing your tax situation (varies state to state) etc. it's not possible to determine if this is out of line.

A word of caution, however. If you are counting on an appraisal done for purposes of financing as true market/sale value, don't trust it as solid evidence of what the house will bring when offered for sale.

I've seen far too many appraisers inflate these financing appraisals 'as needed' in order to get the loan qualified for the lender.

Recently our office listed a foreclosure for a lender. Our recommendation for price was $140K. This property, on a clear day with a very stupid buyer MIGHT have brought $150K tops. The lender was outraged. Why? Because they had an appraisal in file indicating a value of over $200K, and had loaned $180K on the property.

Call a couple of local real estate agents and ask for a free market analysis because you are considering selling. Most will provide comparable recent sales to show you why they think your house is worth what they recommend.

Answer 2

Principal and interest on an 85k dollar loan for a term of 30 years at 6.5% interest is $537.26 - This is a conventional loan, seeing as you are making us geuss I did.

If those are your terms that would mean you are paying just about $300 in escrows which seams too high. This leads me to believe that you either have a 15 year loan or poor credit and a higher interest rate.

If you are in Florida it could just be your escrows because taxes and insurance are quite a bit higher there than most other parts of the country.

The problem is moving will not solve either of these problems. If you move and stay in the same area chances are you will have approximately the same escrows (unless your moving from a flood zone out of a flood zone or moving to neighboring county with substantially less property taxes).
Your loan will most likely fall under the same terms, because moving will not positively effect your credit.

As for selling and fixing it up, it really depends on what you stand to make and what you be able to buy in replacement. An appraised value (especially if it was for refinancing purposes) is not always a good indicator of what you can sell your home for. Older homes are more prone to problems, but the expense of moving is usually more than a couple of major repairs. If you like the house and can see yourself living there for awhile, I would stay.

Answer 3

My husband and I have nearly the same house situation, but with a much, much lower payment.

Did you get a 100 percent loan or do an 80/20?

Check your interest rate, and you may need to think about refinancing again, because it soudns like the mortgage holder isn't very reputable.

Answer 4

wow thats a HIGH payment. But difficult to answer not knowing interest rate or what you taxes and insurance is. Hopefully you ARE on a FIXED rate and maybe you financed for just a SHORT term such as 10 years or 15 years - YES?

Want more help? www.esimortgage.net

Answer 5

Here are things to think about, what will you buy for $20,000. more? Will you be paying closing costs again which usually amount to a few thousand dollars. Write down what it will cost for a new place, payment taxes, ins utilities etc and see if it is worth it to move.