Yesterday I talked about one aspect of the refi quandary - getting an appraisal. With the financial crisis, lenders have tightened up on the ratio of their investment vs. yours. You may have gotten your original financing at zero down, but on a refi the lender will probably want you to have more equity than zero - ten, maybe twenty percent. A lot will depend on your lender and your credit history.
Back when the market was booming and money was flush, we didn't worry about having enough equity for a refi - it was pretty much a given. And we counted on the same equity to cover the refi closing costs, in a rollover from what's called a "cash out refi." Heck, we often walked away with money in our pockets.
That whole scenario has more or less skidded to a stop for folks who did low or no down payment on a mortgage within the last few years in an average or below-average market where values have dropped 10, 20, or even 30 percent. Unless you have a chunk of change, the refi won't happen.
The first step is to get the facts. Talk to your lender about refi terms. If you're unsure about your home's value and don't want to plunk down the cost of an appraisal, you might find a Realtor to give you a BOV (Broker Opinion of Value). I used to charge $100 for this service, with a refund off my commission if the house were listed with me for sale within a year.
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