Real estate / 401K advisers? Upside down, roll 401K into mortgage, etc, questions.

[The A1 and A2 German]

So, I've manged to hold onto my home.....and probably have decided to stay with it, even granted the overwhelming depreciation. My place is a 80/20 split:

80% $163,000 @ 5.125%
20% $39,000 @ 8.375%

I am un-eligible for a refinance as I'm upside down, I've never had a late payment or defaulted. A move in one of my 401K plans has gone from ~$14,000 (invested) to $50,000 net in 2 years....a pretty good return. However that has ceased, and was a one time deal but still have some other 401K left. I'd like to take ~$39K from the 401K (plus penalties) , and use to pay off the 8.375% $39K, which would be 20% down making me eligible for a refinance of the $163,000 to go from 5.125% to todays rates.

A far cry, is there any lesser penalties from rolling from 401K to mortgage? I understand there could be a huge hit, yet saving $500 plus a month! is a lot too....that's $6,000 a year cash....which is almost like $10,000 earnings (this money could even be used to make an extra mortgage payment (not for more toys!) a year on the $163,000 which I hear is substantial).

[jnm2.0t]

You need to first compare the $163k to the current home value, is it 80% or less? If not then you may not be able to actually refinance because paying off the $39k still doesn't get you to 80% of todays LTV. If the house is actually worth more than the combined $202k you may not need to pay off the full $39k in order to do this, keeping some in the 401(k) and avoiding penalties.

If the appraisal works out to do this the tax and penalties are real costs today along with the closing costs on the new loan, though in the long run the taxes need to be paid and if you are in the same rate today as you are when you make the retirement withdrawal the tax effect is a wash. If you want to be conservative include the cost of tax today, otherwise only focus on the penalty and closing costs. I would do it for myself given your loans and rates along with the current rates out there and I would strongly encourage you to use all your savings as an increase in your retirement contributions. Also, depending how far into the loan you are consider moving to a 15 year loan instead.

[FLY-GTI1]

You say you're "un-eligible to refinance" because you're upside down but have you actually approached some banks about it? The HARP and HARP2 programs allow homeowners who owe more than their homes are worth to refi.

Last month I refi'd a rental property I was underwater on through the HARP2 program.

Don't rule out a refi..

[The A1 and A2 German]

Alright guys, thanks for all your input. I contacted my lender today, Wells Fargo, even laying down $50K cash....they say I'm un-eligible for refinance.

Due to a Harp program of some thing along those lines, with a cut off date that I missed by 4 months in my last refinance. Apparently if I refinanced in February, as opposed to June.......I'd be eligible and there's nothing that can be done. Bought for $230,000.......they are going for $90,000....

$140,000 upside down.

I think I'm just going to walk away.

[jnm2.0t]

Any nearby recent sales you can look at to see if 90k is realistic or just a number the bank made up? Zillow, Redfin, etc let you see sales from the past 3, 6 etc months. If it looks like a possibility you can start talking to other lenders.

[Hostile]

Alright guys, thanks for all your input. I contacted my lender today, Wells Fargo, even laying down $50K cash....they say I'm un-eligible for refinance.

So go to talk to some other lenders.

[titleist1976]

So go to talk to some other lenders.

This. There is no reason to only speak to WF. Plus, do some research about HARP on their website before making that final decision.

[The A1 and A2 German]

Alright guys, thanks for the input, I'll attempt another lender but not really optimistic at this point.

So, in the past 24hrs, I've been talking to the good friend who also was my agent. As a better option, we thought of instead.....placing the 401K toward an actual house (see a great potential house below at $125,000 gezz.....makes me sick) and short selling mine. The mortgage on $55,000 on ~3.9% . ....makes me sick!

This. There is no reason to only speak to WF. Plus, do some research about HARP on their website before making that final decision.

The mortgage must have been sold to Fannie Mae or Freddie Mac on or before May 31, 2009.

The mortgage cannot have been refinanced under HARP previously unless it is a Fannie Mae loan that was refinanced under HARP from March-May, 2009.

__________________________________________________ ______________

I simply feel like burning my place to the ground, see this.....financed in ~JULY phuck!!!! 2009! The house is the worst thing that's happened to me, it sucks the life and all my money for nothing. And! Just found out from a phone call ~5 mintues ago I can't even roll my 401K towards a house unless it's my first purchase.....another slap in the face.



Look at this house:

~$125K. Just my hoa fees ALONE! COMPLETELY ALONE where I'm at now, would pay 4 months of that mortgage financing the FULL amount of that house on a 30 year.

http://www.flexmls.com/cgi-bin/mainm...=12&id=1&cid=1

Makes me sick.

[titleist1976]

Alright guys, thanks for the input, I'll attempt another lender but not really optimistic at this point.

So, in the past 24hrs, I've been talking to the good friend who also was my agent. As a better option, we thought of instead.....placing the 401K toward an actual house (see a great potential house below at $125,000 gezz.....makes me sick) and short selling mine. The mortgage on $55,000 on ~3.9% . ....makes me sick!

The question is: will you qualify for the new house while still having the old house in your name?

[jnm2.0t]

I had thought about this buy a second house today before your credit gets ruined but as above ya, can he qualify for it? I dont know the original balances on the 2 loans but lets say the payments are $1200/mo. The place you are looking at, 155k with 20% down and lets say 3.5% loan is $550 (plus ins, tax, etc). If you could find a renter to even pay $550 a month on your existing house the net expense to you is the same. Anything over $550 and you will be in better shape cash flow wise to own both houses. Could you float that $550 if it went unrented?

You would not likely be able to do the opposite and claim the new house as a rental unit, the bank could view telling them it is a primary residence but immediately changing your mind and renting it as fraud. The existing house though, it is quite legitimate to have changed your mind since the loan was taken years ago that you now want this to become rental property.

Option 2 is just default on the original and not worry about ruined credit, you already have the $155k house but why not have someone else fund part of the mortgage and hold onto the property?

[titleist1976]

I had thought about this buy a second house today before your credit gets ruined but as above ya, can he qualify for it?

That's the worst sentence I've ever seen you type. On your iPhone again?

[jnm2.0t]

That's the worst sentence I've ever seen you type. On your iPhone again?

No no, I just don't care that much anymore, my new marginal bracket thread is probably way worse. My MIL said she will buy the kiddo an iPad but I told her no, and no to any iDevice toys too. A Surface though would be welcomed.

[ValveCoverGasket]

Look at this house:

~$125K. Just my hoa fees ALONE! COMPLETELY ALONE where I'm at now, would pay 4 months of that mortgage financing the FULL amount of that house on a 30 year.

http://www.flexmls.com/cgi-bin/mainm...=12&id=1&cid=1

Makes me sick.

thats a rad looking house... some real deals you guys have got down there. prices seem to have long since stabilized (and really didnt drop that much in the lower end of the market) up where im at.