Should a San Diego or California homeowner refinance their loan in this market.
Questions
Is the loan you will retire a purchase money loan?
Is there a risk your property is upside down or will go upside down
Is there chance you will not be able to make payments
Do you have other assets to protect
Would you worry about a the potential for tax liability for loan forgiveness
Do you have second loan or a heloc as well?
These a just a few of the questions that need to be considered.
Why?
If you have a non recourse loan in California you would be giving up some of your protections against deficiency judgments and protection from tax liability for loan forgiveness. Therefore, you have to do a cost benefit analysis.
I remember a time when my old lender countrywide would call my house and ask us if we wanted to refinance our mortgage. I never remember them advising me I might be losing very vital protections.
If you have refinanced out of a purchase money loan and now you are upside down you might want to speak with an foreclosure attorney before you take any further action.
The more I work with upside down homeowners the more I realize that the predatory lending and the related disputed debt argument must be considered as part of your deed in lieu or short sale negotiations with the lender.
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