I have been an active REALTOR for over 11 years and I am seeing a problem in the real estate market, at least here in Jacksonville NC. We are a Military Community and I for one am very proud of that fact. But that has its own built in issues, the main one being that about every three years the Active Duty Service Members are moved to a new Duty Station. While there are plenty of new Duty Stations here in the area that would not necessarily require the entire family to relocate. As the wife of a now retired Marine we moved a lot during our Active Duty time the first few years we moved at least once a year! Needless to say, buying a home at that point in our lives was not an option.
The current market conditions here in Onslow County are that it is almost cheaper to buy than it is to rent but you really need to evaluate your situation before you make that decision. And most people look at refinancing their home as a way to get some "free" cash, the fact of the matter is that couldn't be farther from the real truth. What ever the amount you finance, you are paying for it. Refinancing should only really be used if you can significantly lower your interest rate and the result of that would be a lower payment. That is not what is happening, payments continue to rise as people keep restarting the "mortgage clock" by refinancing their homes and taking any equity they may have out.
I keep encountering people that really want or need to sell their home but they have refinanced their home and borrowed what it appraised for in the last couple of years. That’s all well and good but if you take all the equity out of your home and basically start the 30 year clock again it really does not provide any extra money to you if you manage to sell your home. Given the conditions of the market (still recovering) it is risky, even crazy to take the full amount of the appraisal if you don’t have to. For example say your home appraised for $180,000 but you only owe $150,000 if you refinance for the amount of $180,000 to cover all your closing costs and then you are going to pay off a credit card or something GREAT! But, if you have done that and now you get orders and need to sell but the market value of your home, according to your Real Estate Professional, is $175,000 then you have no money to pay any of your closing costs, in fact you would probably have a negative -$10,000 or so in order to sell your home. I don’t know a lot of people that have the ability to pay that much to sell their home, although I have heard from some people that sellers are bringing that much money and more to closing to be able to sell their home.
So, if you think you want to refinance your home, really think it through and don’t borrow the full amount if you don’t have to. Leave some equity in the home so that if you do end up needing to sell you will have a better chance of being able to walk away with a little bit of money in your pocket and a more positive experience in your home ownership.
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Ellen Hough, Jacksonville NC Real Estate , specializing in guiding home buyers and sellers through the home buying and selling process. Working at EXIT Independence Realty, call or text me @ 910-330-6103 (Cell)