Refinance Negative Equity Mortgage?
Here’s my situation. I purchased this house for $ 450k back in 2005 and did about $ 200k worth of remodeling to it, however, I have not added any new square footage. It’s all been in stuff like dual-paning the windows, upgrading electrical, paint, hardwood floors, bathrooms, kitchen, etc.
So, let’s say a $ 650k total investment. The neighborhood I live in is quite old and has not had many sales in recent years.. everybody living here has been living here for like 20+ years. The last sale occurred when an old guy died a year ago. There just aren’t any real comps to go off of. Also, with the exception of 1 or 2 houses in the area, they’re all built in the 50s and have seen nowhere near the level of remodeling that I’ve done to my house.
I’ve had two appraisals done and they’ve both come back at around $ 310-$ 320k. I currently owe about $ 340k. Ok, fine.. so my house has lost 30% from what I purchased it for but let’s say I get even 50% out of the improvements I’ve made, doesn’t that bring the value up to $ 400k+? It seems like the appraisers aren’t valuing the improvements I’ve made at all, and I have even given them a sheet with a breakdown of how all the money was spent and what was improved. I have no doubt that if I had to sell this house, I could get $ 400k in a heartbeat. It’d be a steal at $ 400k but then I can’t prove that without actually selling it, which I don’t want to do. I much prefer to hang on to it for a while until the value catches back up a little.
Unfortunately, my neighborhood is within a half mile of a pretty poor neighborhood where houses have been getting foreclosed on all over the place and selling for as low as $ 50k. There are some other decent neighborhoods within 1 mile where similar houses (in terms of bed/bath sqft) have sold for $ 250-$ 300k but those are very few, and I’m sure again that they haven’t been remodeled as extensively as mine.
Now, I understand that I’ve probably “overimproved” my house beyond what it could ever fetch in this neighborhood but for chrissakes, it’s definitely worth more than $ 320k.
The problem I have is that my ARM has just gone adjustable to nearly 9%, and according to the appraisers, I owe more than the house is worth. I don’t have the $ 20k+ cash to make up the difference for a refinance. I’ve spoken to a few banks and they all say that they’ve gotta go with what the appraisers tell them and they can’t give a loan for an amount more than the house is worth (according to their appraiser). My FICO is around 660 and I’m sure I could get a much better rate on a refinance if I could only find a way to have the appraisers up the value a little.
So, I guess the question is kind of 2 parts..
1. Is there any way to refinance when you’ve got negative equity? If yes, how do I go about doing that?
2. Do you have any recommendations for getting the appraisal up another $ 20k so I can do a regular refinance?