I heard back from my loan officer today. If you didn't see the post last week, I am currently in the process of trying to refinance my mortgage. The only thing causing a delay in the refinance is the home appraisal.

When I purchased my home in March 2006, I paid $189,140. One of the selling points the Realtor used was that I would have "instant equity". I was buying into a brand new subdivision and they were still building homes. My home was the last inventory home and the price for new homes with my same floor plan would be increased to $199,000 and above. For the first year and a half, it would be nice to pull into my subdivision and see the signs out front saying "New Homes - From the Low 200's". I'd smile and think of how I paid almost $10,000 less for my home; in just a couple of years, after making extra principal payments and the home appreciation, I'd have over $20,000 equity.

Fast forward three years to today. My neighborhood remains unfinished. I would probably say the builder finished about 75% of the planned homes. We aren't sure if the builder will finish the subdivision or sell the remaining empty lots to another builder. They closed the office/model home last week and the sign out front now says, "New Homes - From the $170's".

So how much did the mortgage lender say my home appraised for? How about the absolute highest value the appraiser could find was $175,000. Thanks to several foreclosures in my neighborhood and the crappy housing market, my home is now worth about 7.5% less than I bought it for. I know that some parts of the country have experienced double digit decreases so I can't complain too much but it is still frustrating as hell!!

The only positive thing is that I don't need to sell my house anytime soon. Hopefully, within the next 2-5 years, my home will be worth more than I originally paid.

Have you recently tried to refinance but couldn't because your home value has fallen?

Image Courtesy: glasswindow


  1. Kara // June 4, 2009 at 1:55 PM  

    Surprisingly, my husband and I were able to refinance in late February. We live in the metro Detroit area, less than 10 miles from Chrysler's headquarters, which is some of the worst-hit real estate market in the country. We were very fortunately that our house appraised for more than it had when we bought it in January 2008. What helped us was that we live in a subdivision that is still being developed, and two houses had been built and closed on within the past few months, for close to $100,000 more than what we paid for ours (which we bought out of foreclosure).

    We refinanced with a 15-year 4.875% mortgage through a local credit union. I am definitely glad we did it when we did - especially now with all the crazy auto news.

  2. K-money // June 5, 2009 at 1:48 AM  

    This post made me giggle. I cannot refinance and I have applied for a loan modification as the only possible way to get a rate reduction. I have excellent credit, no debt but the mortgage, etc. but I cannot refi because the value of my home has dropped about $150,000 (more than 15%). Because the cost of housing is so high, my really expensive house is not a mansion but a 2 bedroom bungalow. At least I can afford my mortgage payments and my job is stable. I'm just glad my situation isn't any worse.

    So if your house is only down a little and you can actually refinance you are sitting pretty in my opinion. I'd be glad to trade mortgage payments anytime.

  3. Petunia // June 5, 2009 at 6:37 PM  

    That's a very modest decline!

    I bought my home in November 2007. It was a foreclosure. The previous owners had paid $359,500 in early 2004 (not the market peak). I paid $231,400, and immediately spent another 10k painting, re-texturing walls, replacing lighting fixtures, and replacing flooring.

    Today, zillow says my home is worth $168,500. Judging by the prices of homes for sale in my subdivision, I would say that is optimistic.

    I wouldn't re-finance anyhow though, I am at 5.25%.

  4. CashAholic // June 7, 2009 at 11:11 PM  

    I don't have enough equity in my house to refinance. Bummer. Still, owning a home today is an accomplishment, in light of all the foreclosures one hears about on the news.