Posts Tagged ‘market value’

Mortgage Refinancing When Under Water?

April 23, 2013 Leave a comment

Refinancing Your Mortgage When Under Water


The biggest issue in refinancing is the appraisal value of the house compared to the loan value. When a house is worth less in today’s market, than the loan balance owed, then it is said to be “under water”.  It can be hard to refinance unless you qualify for a HARP Loan or one of the streamline refinancing programs.  As a Mortgage Lender, I have two basic options for people in this situation.  

Mortgage Refinance Option One:

Programs for refinancing when under water are for loans that are owned by the Government.  Most loans are owned by the government but some big banks don’t sell them.  The loans that can be refinanced when under water can be owned by Fannie Mae, Freddie Mac, VA, USDA, or FHA.  Do you know if you have one of these kind of loans?  If you don’t know, you can call your mortgage company and ask.  Then let me know.      

Mortgage Refinance Option Two

If not one of the loan types mentioned in option one, we can still refinance if a borrower can pay the difference between appraisal value and loan amount.  Some people borrow against their investment portfolio or 401K to do this.  Is this a possibility?  

Let me know the answers to these questions and I will try to help further.

How Can I Know Appraisal Value 

Your county auditor bases real estate taxes on a taxable value for your home.  This tax value is supposed to be based on a theoritical market value, but in some cases, like many areas in Michigan, you multiply the tax value by 2 to arrive at market value.  The auditor does not know for sure what your house is worth because they have not been in your house.  They go by average sales of similar homes.  If you have made major improvements or recent home sales in your neighborhood have been for more money then maybe your appraisal will be higher than tax value.  Usually it is not worth spending the money on an appraisal unless the auditor value is at least in the ballpark of the amount owed, or more.  Real estate web sites like and can also help determine ballpark value but not appraisal value.  The only way to get an actual appraisal value is to get an appraisal.  These cost from $400 to $500 these days.

To refinance your house, especially if auditor value is not 20% more than loan amount owed, you will most likely need an appraisal.  Again, make sure the auditor value is at least in the ballpark before letting a mortgage bank order an appraisal.

For additional information see also, or

Lonn Dugan, Loan Officer, Midwest Mortgage Investments, and