8/23/11

Mortgage Update

Previously on our refinancing story...

We just received an appraisal for our house because we are trying  to get a mortgage. The good news is that our house was appraised at almost double the purchased price! I did a little math and found that with all the money spent on the renovation in addition to the purchased price we still gained equity! Woohoo!!!

We were worried about the neighborhood comparables giving us a low appraised value. A low appraisal means we wouldn't be able to pay back the full amount we owe our family. According to the appraiser's documents, there are very few recently comps to use for evaluation because our house is a multi-unit in a mostly single family home neighborhood. Most of the comps are in need of TLC and our house is basically brand new. The appraiser did find eight comps and our house is in the higher end of them. But it was good to know that we didn't over improve for the neighborhood. The rent we get from our apartment downstairs is in line with the rentals in the area. It is smaller square footage wise, but it is has brand new everything so it's comparable to other larger units that need updating. If we do eventually decide to move and rent out all three units, the rental income will more than cover our mortgage payment. I am seriously considering renting out the other unit to further lower our monthly mortgage payment. 

We locked in the rate at 5.25% for a 30 year fixed. We didn't get a super low rate because Justin doesn't have a high enough credit score, but it's a huge improvement from two years ago when we first started looking for a house to buy. I have pretty good credit, but being a stay at home mom and having been freelancing on and off for the last few years due to school prevented me from applying for the loan with Justin. 

The loan officer at Chase told me that even though we have formally been approved for the loan, the underwriters might still request an additional appraisal review for our house. He said it's because our house was appraised at the high end of the comps so we are not totally out of the clear yet. I am keeping my fingers crossed. With the current appraised value, it means we can take out the amount that we need and still have the mortgage payments be affordable on a single income.
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Update...

All the paperworks (gazillion pages) were signed by all parties yesterday at the title company. Now it will take three days for the loan to fund. We opted to have the mortgage payment withdraw automatically from the checking account each month which gives us a 1% refund at the end of the year. Every little bit of savings count.

Now let's talk about being landlords. We currently have one of the two apartments downstairs being used for storage and as the occasional out of town guest suite. We have considered renting it out like we did with the other apartment, but we are not sold on the idea of having to deal with another tenant. We got an email from a friend the other night asking if we would rent it out for three weeks to another friend who'll be in town for work. After some back and forth, they decided to stay for a whole month and pay a slightly discounted rent with all utility included. If this works out, I would seriously look into doing some short-term rentals to take in some extra income. Now I just have to get the apartment furnished and ready for our new tenant!

There is an online company that help people looking for places to stay and those who have places to rent connect with each other called Airbnb. People list on the site to offer vacation or short-term rentals in their houses to travelers for less than what you would spend on hotels.

Hotels are crazy expensive in New York city,  I would definitely give Airbnb a try the next time we go visit friends there. I checked out available rentals in our city and all the places are pretty nice and reasonably priced. I think our apartment can definitely be in the running once I have it furnished and get the yard fixed up. 

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