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You’re in a siutation that is facing a lot of homeowners right now. Lenders became very aggressive when it came to lending 90-100% of a homes market value. Now that the values are softeneing, many homowners are "upside down" (they owe more than what the house is worth).
Luckily I work with lenders that will refinance up to 125% of your homes value. The catch to that is that the interest rates usually are not that comeptitive unless you go with a 2 or 3 year ARM ( aloan that will become an adjustable after 2 or 3 years) with a 2 or 3 year prepayment penalty (you will be charged extra money if you sell or refinance before your penalty expires).
When your 2 or 3 years is up you may still be in the same situation because you won’t pay much of your loan balance off in only 2 years. At the end of that time the values may or may not have gone back up.
If you pay the $20-25k to bring your loan balance down then you can qualify for a more conventional loan that will have a fixed term for 15 or 30 years.
If you have the 20k and you want to stay in the townhome for a while then it would be a good idea to go with the better loan. If not, then you might just want to buy yourself some time with the cheaper loan.
Example #1:
The Townhouse on a 111-115% Loan
$175,750 1st @ 8% =$1289
Plus
$29,250 2nd @ 12% =$ 293
Equals
Estimated Total Payment =$1,382 for 2 or 3 years
Note: After two years NOBODY knows for sure what will happen to the interest rates or the RE market. if anyone tells you they know for sure they are lying!
Example #2:
$148,000 1st @ 6.5 = $935 for 30 years
$37000 2nd@ 8.5 = $365 for 15 years
Total Estimated payment = $1300
The choice is up to you and these aren’t even the only two options.The important thing is that you need to work with someone who understands your situation and has the knowledge to explore ALL of your options.
If you don’t have that currently then please feel free to send me an email (kevingeorgecampbell@yahoo.com) and I will respond with my contact information.