Selling vs. Refinancing

There are many reasons why you may want to sell your home. You may be moving to another city, or maybe your family is growing and needs more space. However, if your only reason for selling is that you can’t afford your mortgage, you may have another option.

Depending on your personal circumstances, refinancing can save you money, reduce your monthly mortgage payments, and keep you from losing your family home. The main benefit to refinancing is that you get to stay in your home. Also, you won’t have to bear the costs of moving. Your children won’t have to change schools.

If you bought your home when interest rates were high, you may be able to refinance and get a better rate. To qualify for home refinance, you will need to have a solid credit history and a job. It also helps to have some equity in the property. People who’ve bought their houses at the height of the real estate market may find themselves in negative equity, with the house worth less than what they owe the bank.

If you are in negative equity, don’t despair. You may still be able to refinance, as long as your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac. Under the government’s new refi rules, you can borrow up to 125% of the value of the property.

If you can’t refinance, or you don’t qualify for a low rate on a new mortgage, you may have to sell your home. Selling your home is better than risking foreclosure, as it doesn’t ruin your credit history. However, if you are in negative equity, you will still owe the bank money after the sale. It may be better to negotiate with your lender for a better rate on your current mortgage.