Refinance in Down Market?

[Andrew Goelz]

Hey all, I was looking around the forums and could not find information concerning this topic. Refi in a down market when you may or may not be over-leveraged. This is a more curiosity question than anything.

For instance, let's say you have an FHA loan on a $100K property with 3.5% down, that's $3500, and the market turns for the worse and your house is not worth $100K but you still have $3500 in it.

Does it make sense to get the house reappraised at the "market value" (ie. less than $100k) to increase your equity and potentially refi out of an FHA to a conventional loan?

Thank you all in advance!