Tallahassee Real Estate Blog

Just over three months ago, I wrote a blog article in the Tallahassee Real Estate Blog that examined the relationship between Home Prices and Interest Rates in determining the time to buy a home. It has been the source of numerous comments and debates in several real estate forums on the Internet.

If you refer back to that article, I suggested that future rising interest rates would make a cheaper house less affordable. While I figured that it was highly likely home prices would be falling, I knew that rising interest rates would leave most buyers with higher monthly payments. Sure enough, mortgage interest rates are rising, as you can see in the chart below.

So, even if you are not thinking about buying a Tallahassee home, you might want to look into refinancing your home. Back in April, I wrote a blog titled When Should A Mortgage Be Refinanced? This could be a good reference to review before contacting a real estate mortgage lender.

On another note, here are some of our most popular features on the Tallahassee Real Estate Web Site:

• Full Tallahassee MLS Property Search (Data provided by the MLS)
• Complete Access to Homes For Sale In Tallahassee without annoying registration
• A new and growing Tallahassee Neighborhoods and Subdivisions map and information service
• A near-daily view of the market provided by the Tallahassee Real Estate Blog
• Tallahassee Real Estate Market Information delivered by a full RSS feed
• Tallahassee Real Estate Market Information delivered by E-Mail
• Home buyer resources including a Free Tallahassee Home Buyer’s Guide
• Home seller resources including a FREE Tallahassee Home Pricing Analysis
• A new Free Tallahassee Relocation Tool, whether moving to or from Tallahassee
• A constantly updated Tallahassee Real Estate Market Report
• A Tallahassee real estate career evaluation tool that will let you know if real estate is right for you
• A First Time Tallahassee Real Estate Buyer’s Guide that answers critical questions
• Much, much, more from the top Tallahassee Real Estate Company

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Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed, or you can . You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

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I received a call from a client yesterday seeking my advice on whether or not the client should refinance a property in Tallahassee. After asking the client several questions, my advice was against refinancing until he had a better understanding of how long he would own the property.

Here is how I determined this advice.

Tallahassee Mortgage Refinance - Q & A

• What is the purpose of the refinance? Lower the monthly payment
• How long have you owned the home? Four years
• How long do you plan on owning the home into the future? At least three more years, most likely five or more years.
• What is your current interest rate? 6.25%
• Do you currently pay PMI Insurance? No
• What did you pay for the home? $236,000 four years ago (financed $212,400)
• What is your current payment (Principal and Interest)? $1,308 per month
• What is your current loan balance? $202,000

With that information in hand, here is how I determined my response.

The Tallahassee home will currently appraise for about $275,000. As long as the new loan is kept at 80% loan-to-value (80% x $275,000 = $220,000) or lower, my client can get the best rate program available. Expecting closing costs for this refinance to be about 2% of the loan balance (roughly $4000-$5000), I figured new loan would be his old balance plus $5,000 more which totals $207,000 for the new loan. Currently, I believe the thirty-year fixed rate to be roughly 5.75%, so the new payment (P&I) would be $1,208 per month, a savings of $100 per month. That means his break-even would be fifty months ($5,000 closing costs divided by $100 savings per month = 50 months).

With his break-even being over four years away, and his expectation of ownership being three to five years, I did not feel that increasing his loan amount by $5,000 now would make sense. Nobody really knows for sure how long they will own their home, but making a best-guess is really important in determining whether or not to refinance the property. While saving $100 per month seems like a smart thing to do at present, having to give it all back, and more, in a few years when selling does not seem to make great sense.

In this case, I used the thirty-year fixed rate program, even though the client did not expect to own the home for much longer than five years. This scenario is perfect for a loan program that is fixed for five to seven years and then adjusts, as he will not own the home at the point of adjustment. Unfortunately, the rate differential was not that attractive and the client did not have the confidence level in his expectation of how long he would own the home, so we stayed with the thirty-year fixed-rate program. Do not hesitate to look at other loan programs if you know you will be selling at or near a specific point in the future.


So, if you are considering whether or not to refinance a home in Tallahassee, here are the questions that you need to ask yourself:

• What is the purpose of the refinance?
  
• How long have you owned the home?
  
• How long do you plan on owning the home into the future?
• What is your current interest rate?
  
• Do you currently pay PMI Insurance?
  
• What did you pay for the home?
  
• What is your current payment (Principal and Interest)?
  
• What is your current loan balance?
  

As a reminder for those who subscribe to the Tallahassee Real Estate Blog by email, some embedded pictures and videos might not be appearing in your email and you might need to click the title header to go to your browser where all will be visible.

Keep checking out the Tallahassee Real Estate Blog every day for updates that include charts, graphs, and analysis of the Tallahassee real estate market.

If you like this Article then please subscribe to my blog through a full RSS feed. You will be able to stay informed about the happenings in the Tallahassee Real Estate Market. You can also subscribe to this blog and have it delivered by Email.

Joe Manausa is a real estate investor and the Broker and Co-Owner of Century 21 First Realty. He can be reached via e-mail through the Tallahassee Real Estate Website or catch his latest writings on the Tallahassee Florida Real Estate Blog , or by calling (850) 386-2001.

If you'd like to forward this post to someone you think might be interested, simply click on the "Share This" link and click "E-mail."
Share This

If you'd like to forward this post to someone you think might be interested, simply click on the "Share This" link and click "E-mail."
Share This