Mortgage broker: Dianne Crosby, senior vice president, RPM Mortgage
Loan Amount: $508,800
Loan type: 30-year fixed
Rate: 4.5 percent
Backstory: The recent appreciation in the housing market has provided homeowners new opportunities.
A client met with Crosby explaining his situation, and the stress could be seen on his face. The monthly payments of his FHA loan were weighing him down.
Crosby quickly noted if there was at least 20 percent equity in his home, he could refinance into a conventional, 30-year fixed rate mortgage without mortgage insurance and drastically reduce his monthly obligation.
She suggested they proceed with an appraisal to determine their options. When he purchased the home in 2009, his assets were limited and 6 percent was the maximum he could spend on the down payment; his only option was to go with an FHA loan.
His monthly payment - which included principal and interest at a rate of 5.5 percent, taxes, homeowner's insurance, and mortgage insurance - was $3,891.59.
If the appraisal came back in support of the 20 percent equity in the home, the newly refinanced conventional loan payment would be dramatically reduced.
The much anticipated appraisal report was generated a few weeks after the initial meeting with Crosby, and sure enough, the home had appreciated significantly. His current principal balance was $508,800, and the appraised value came in with a value of $670,000. The new equity in the home was more than 26 percent.
His home had appreciated $120,000 in the four years he lived there - not a bad return on his initial investment.
The appraisal allowed him to refinance as planned into his conventional, 30-year fixed rate mortgage. The monthly principal and interest payment was reduced to a much more comfortable $2,578.01, a savings of $1,313.58.
Dianne Crosby, (925) 743-3501, firstname.lastname@example.org