Trying to Refinance to Fixed Rate - Property Appraised Low

Reader Question: I recently purchase a brand new home in April 2007 469.000 with a 20% down payment at an ARM rate, I recently tried to refinance for fixed rate, however the property appraised at $290.000. How is that?

Welcome to the recession. It sounds like your property values have dropped, as they have done in most parts of the country.

This is a problem for a lot of people who are trying to refinance their homes right now. They approach a lender to get a refi loan, the lender sends an appraiser out to get a current value of the property, and the homeowner is shocked to find how much their values have dropped.

Approximately 12 million Americans are upside down in their mortgage loans right now, meaning they owe more than the home is worth in the "new economy." In most cases, this puts refinancing out of reach. From the numbers you've provided, it sounds like you might be in the same boat. For what it's worth, I feel for you.

I recently posted a Q&A session on our refinancing blog about this very topic. A fellow wrote in asking how to refinance when upside down in a mortgage. That post might be worth reading as well. It doesn't offer much in the way of good news, I'm afraid. But it will help you understand what's happening in the U.S. housing market right now.