Is refi a better option or Short sale?

Question

Hi all
I am not sure if this is the correct place to post my question. 
I need some suggestions on a similar situation.
I own a condo in FL which is extremely under water. The current loan balance is $102,000 where as the property value is a about $45k. I purchased it in 2006 for $120K. My interest  rate is 6.25%. It is a 30 yr, convinential loan from Freddi Mac. The situation is that I have moved out of state for last three years and have been renting here. I have been making my mortgage payments on time. I no longer have homestead on my condo so my taxes have gone up. I have tried to do some sort of refi but was not able to up till now due to the LTV and the condo not being my primary residence. Also I was told that because I am current on my payments I dont qualify for the other loan re-modification programs or assistance programs....doesnt make sense to me as to why you would penalize someone who is making payments on time?? I had someone rent the place towards the end of last year so I have showed rental income on my 2011 taxes. Currently I have no renters and have not been be able to find any.
I have looked into HARP 2.0 refinance but I am running into some issues. Citi Mortgage tells me that because this condo is now considered an investment property the refi interest rate will be like 4.75% instead of 3.5% and I have to pay close to $4k in closing cost.
1. I am wondering if I could try to refinance this as a 2nd home instead of investment property? Because I dont have any renters right now and honestly I cannot afford to spend $4K on an empty condo.
2. How do I know what qualifies it as a 2nd house or investment property.
3. Can I qualify for a loan reduction cuz it is underwater and I thought that was the criteria? or any type of Hardship program
4. If I want to take advantage of HARP 2 do I have to go with my current lender (Citi)?
5. Because the condo and the loan is in my name and not my husbands...do I just show mine or his income as well?
6. Or the best option is to just do a short sale??? If yes, what are the implications.
Any other suggestions that anyone can give me would be helpful.
Thanks

Kyle J. · Answer

Personally, I would try to rent it out or refinance before doing a short sale.

When you tried to rent it before, why were you not able to find a tenant?  Is the place in good condition?  Was the rent you were asking reasonable for your area?  You have to find out what the rent comps are in your area and keep your rent in line with those.  You can't just charge more because your property is underwater and your payments are higher.  Not saying you were doing that, but many people do try to charge higher rent because they bought at the wrong time and their costs are higher.  Tenants don't care about your costs...only what they have to pay you.

If you can't, or don't want to, rent it out then I'd call around some more on the HARP 2.0 loan refi.  The refi does not have to be done through your current lender.

These are the requirements for a HARP 2.0 refi:

- Your mortgage must have been sold to Fannie Mae or Freddie Mac before June 1, 2009.
 - You must be current on the mortgage and have no late payments in the last six months. A late payment is defined as one that's more than 30 days overdue.
 - You must not have more than one late payment in the past 12 months.
 - This must be your first refinance through HARP. If you have refinanced under an earlier version of HARP, then you do not qualify.

How to check if Fannie Mae has your loan: http://www.fanniemae.com/loanlookup/

How to check if Freddie Mac has your loan: https://ww3.freddiemac.com/corporate/

Tim Delp · Answer

If you have a Freddie Mac you can only increase your loan amount by 3% or $4,000, whichever is less, (in your case this will be 3%)  Any closing costs above and beyond that you will need to pay out of pocket.  Odds are anything above that is going to be establishment of your escrow account for taxes which really is not closing cost and you should have money in your current escrow which will be refunded or credited towards your loan payoff.

If you were renting it and plan on renting it again than it is an investment property.  A 2nd home is exactly that a home you use for your personal pleasure as a 2nd home.

HARP loans are non income qualifying so it doesn't matter how much income you make, but you do have to have a source of income.  If the current loan is just in your name you just need to show your income and I would suggest you do not add your spouse, no reason to add him to the mortgage where you are upside down in the property.

When the property was rented how much money were you losing monthly?

If you refinance how much money will you be losing monthly?

Whether you should refinance or short sale is really only a question you can answer based upon your goals, your financial means and such.