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Question for the Money Doctors

Question submitted on Mar 14, 2012.

Question

I am 56 yrs old and have a 6.2% jumbo 30 yr loan closed 5 yrs ago. I attempted to refi to 15yr jumbo but house did not appraise although originally put 30% down. I am still finishing the house (basement) which will cost approx $150k. Should I take the $150k and refi now or wait until basement is finished and refi hoping that house will have increased to meet 20% equity requirement. First appraisal was flawed as no comparables due to unique modern design home.

Answer

There are no easy solutions to your problem.  However, with interest rates so low, it really makes sense to re-finance to a 30 year fixed mortgage somewhere in the 4 to 4.50% range.  Do not lose your chance as interest rates are bound go to up in the next couple of years.  If you finish the basement, you run the risk of the appraisal still not coming in at what you want and still be stuck at 6.2%.  It seems to me the only sure thing. 

Alternatively, consider paying for an independent appraisal and ask the appraiser what the hypothetical increase in value could be if you did finish the basement.  Good luck! 


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