"Buy a condo," they said. "It's the best investment you can make," they said.

December 1, 2009 5:11 PM

Caught between a potentially troublesome mortgage and a bad job. How should I proceed?

I moved across the country, largely to take a certain job. To do that, I had to rent out my condo because it would have been hard to sell in that market. (And would still be hard to sell now.) That condo is under a 5-year ARM (adjustable rate mortgage) that starts adjusting in almost exactly one year.

I went shopping for refinancing, and the condo's status as an "investment property" and the loss of equity is killing me. Only my current lender is able to offer me a reasonable (although not great) deal for a fixed rate mortgage. However, the refinance process will take about three months, and during that time, I have to stay at this job.

The problem is that I hate the job and was planning to move on around now. It's easily the worst job I've ever had. It is bumming me the hell out, and I'm at the end of my rope. I was planning to start looking for contract work for a while, and then get started on my own consulting business. I'd really like to not have to stay or to hop into another full-time job for a while.

So, I guess my options are to stick it out for the refi or to move on and see what happens with the ARM next year. Some lenders have told me that I might be OK with it because interest rates are so low, but can it be reliably predicted that the Fed won't raise them in the next couple of years? A friend of mine in finance says that knowing what happens

I completely missed the non-resident-owner problem with refinancing when I made my decision to move, and I'm hoping I'm not missing anything this time before I make my decision. Please let me know if I am.

posted by anonymous to Work & Money (6 answers total)

Is there a reason why you can't move back across the country into your own condo again? If you already hate your job, is there a reason to stay in the city you're in?
posted by KathrynT at 5:28 PM on December 1, 2009

KathrynT has it. Get a job back home, move back in, your condo is no longer an investment property, refinance accordingly.
posted by davejay at 6:01 PM on December 1, 2009

also: my father-in-law strongly encouraged me to get an interest-only mortgage a few years before the market collapsed. my mother's bank strongly encouraged her to invest in the stock market a few months before it collapsed. my mother and I both chose saver paths (fixed-rate mortage for me, high-rate CDs for her) because it's often unwise to listen to what "they" say. consider that a refi to a fixed rate -- even at a percentage somewhat higher than the best-case-scenario ARM rate -- at least gives you a fixed, known payment instead of something you have to worry about.)
posted by davejay at 6:03 PM on December 1, 2009

There is no way to know when the Fed will start to raise rates. I believe they have implied that they aren't going to raise rates in the near term, but they can't keep rates this low forever.

Don't use that as an excuse to stick with a job you hate for an extended period of time. You may not get the best possible mortgage rate if you move on, but at least you will feel better. Unless we are talking about the process taking a month or two, in which case you should totally grin and bear it, move on and explore your other options.
posted by aburd at 6:29 PM on December 1, 2009

Hey anon, you've done some of your homework and have found a way out of your ARM, that's good. Now you have to ask yourself some questions.

Is the property worth keeping? Good location? Potential future value? Equity builder?

Are your tenants paying enough to cover your new (refi) mortgage payments?

Do you have any savings to repair and maintain the property?

If not, then you might as well move on, quit worrying about the ARM adjustment and check out this post from yesterday on the blue.

If that's NOT the case, then this MIGHT be a property that can open a lot of financial doors in the future. It's up to you to figure out if it's worth it.

I will say though, that I've known many people who were this . close to being full on millionaires but let their properties go during tough times. It's definitely a balancing act, but it might be worth it for you.

FWIW, I was once that . close too but my time was spread too thin and couldn't handle being a property manger. Do what's right for you, and good luck!
posted by snsranch at 6:37 PM on December 1, 2009

It might be best to do the refinancing before quitting or changing your job, especially if you become a contractor or self-employed. Underwriting standards are more strict than when you purchased your condo and your recent (planned) change in employment may impact your ability to refinance.

This article may help you.
posted by Andy's Gross Wart at 7:23 PM on December 1, 2009