Homeowners who anticipate that they will be selling their house within a few years want to net as much from the sale as possible. I use the verb "net" deliberately to indicate that what matters is not how much they receive for the house but how much they have left after repaying the mortgage.

Real estate agents counsel borrowers on ways to get the best sale price, such as repairing obvious defects, keeping the house sparkling clean for potential buyers to view, and so on. I don’t have anything to contribute on that topic.

But some owners view an impending sale as a way to save money on the mortgage if they can refinance into a lower payment, and I do have something to say about that. The borrowers who do this often ignore the impact of the refinance on the size of the loan balance that they will have to pay when they sell. Here is an example:

The current balance on a 4.125 percent mortgage is $300,000, with a payment of $1,685 and 23 years remaining. The borrower expecting to sell in two years refinances into a new interest-only adjustable-rate mortgage (ARM) at the same rate, reducing the payment to $1,031.

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