Hello Mustachians, and thanks for reading my question. I am sorry this post has grown entirely too long but hopefully it includes all the needed info to answer the questions!
I would like to refinance the mortgage of our primary residence. We own no other real estate. However, I have no idea what the home is worth and don’t want to spend the $450 appraisal fee (per servicer Chase) without first having a good idea of the value. To allow a typical 80% LTV loan, it would need to appraise at $276,250. There are two data points of what it IS worth – Zillow (on Mint) says $188k and the Chase tells me Fanny/Freddie? have a database that says value is $285k. The Zillow value peaked at $240k in August 2014, which it had crept up to slowly over a few years (sorry, no hard numbers, just memory here). Sometime in the fall, the Zestimate started dropping like a stone and leveled in November 2014 at the present $188k. The local economy (Detroit suburbs) has been slowly improving since the valley of the twin auto bankruptcies in 2009. This year was an very good sales year for autos (OEM performance still drives the local economy more than any other single factor), and no “bad news” happened that I remember to coincide with the Zestimate drop. The immediate local area is considered upper middle class / borderline affluent, good schools, lots of lakes, etc., etc. I cannot understand why the estimated value dropped 21% in a few months.
Purchase Price: $318k December 2005. 20% was put down.
Current Loan is a HARP refi from May 2011.
Balance: $221k
Rate: 5.375%
Terms: 30 years / fixed. Already face-punched myself many times for this, should have gone to 15 year or less.
Verbal quote on re-fi loan:
3.375% for 15 years. No idea about costs yet (in the mail).
This quote was given by Chase (servicer) after I responded to their mailing regarding refinancing. I have periodically looked into refinancing but always get stuck at the LTV unknown.
I will shop around for better rates & costs, but the 80% LTV requirement is (I assume) gonna be the same no matter the lender.
Credit score is 753 per Mint.com
tl/dr: how to figure home value without dropping $450 for appraisal?
The second question is how to bring cash to table at a closing to reduce LTV to 80% if appraisal is low? I do not want to pay PMI, as we could be trapped paying for a long time if house value drops (once bitten...). We have NO CASH ON HAND OUTSIDE OF 401K / TIRAs / HSA. Any cash in excess of monthly expenses is put to CC debt, but month to month excess is highly variable - I cannot put a number on it. I have been working to reduce expenses, but that would take a separate post. In any case, I should (or should I?) start paying down the principal by the same amount as the increased payment if the refi went through.
Assets
TIRA: $330k, all cash since recently rolling over old 401k
401K: $230k, most invested in 2035 target date fund
Loan to brother: $6k. Payments start in a year. It is on a 0% CC. I only listed this as an asset because I believe banks do the same . Wife thinks we’ll never get the money.
Debts
Student Loans: $4k at 2.3%
CC: $12.8k at 0% (includes loan to bro)
Ongoing Savings:
401K is maxed out ($18k / year)
HSA gets $5500 / year, but this is spent. The balance is around $3k most months, remaining steady with contributions and withdrawls.
Other financial info
I may receive a bonus in 1Q15 around $10k gross, but you never know.
Planning to pay for DD college starting fall 2015. $15k/year given her current scholarships, more of which may come this spring, but you never know.
For bring money to closing, I am considering that it is actually not possible, a 401k loan, stopping 401k contributions, CC’s (seem to get lots of 0% offers and currently charge ~$3500/month paid in full), raiding the HSA (by stopping contributions) as possibilities. None seem to be particularly good options. It would help tremendously to know how much is needed to get 80% LTV.
If you made it this far, thank you again for reading about my situation. I appreciate any advice you can offer!