Rising Home Values Help CalSTRS 80/17 Refinancing

The CalSTRS 80/17 Home loan program helped many educators and employees of the California’s public education system buy homes.

When CalSTRS discontinued the home loan program in the summer of 2011, it left many homeowners high and dry with no option for taking advantage of the historic low interest rates that have been available for the past year.

On May 21st, 2012 I wrote and article that focused on 3 Options for Refinancing a CalSTRS 80/17:

  1. Combine 80% first and 17% second if you have equity
  2. Pay off or down 17% second to create equity
  3. Resubordinate 17% second mortgage through Bank of America retail banking center

Of these options, the second option was the most likely option for those homeowners that had the ability to contribute money toward principle balances to reach the equity requirement for refinancing.

Approaching Bank of America for help, while theoretically is a viable option, ended up being an act of futility for all that attempted it.

The first options of combining the first and second mortgage into a new first loan at a lower rate was, at the time, not great option for most homeowners as there simply was not enough, if any, increase of value early in 2012.

California Home Values Increase in 2012

The value of your home is based on what someone would pay to live in a home with similar size, age and amenities within a close proximity to your home.  One way to measure an increase in value is to look at Median Home Sales statistics.

Year to year home sales prices have increased 23% Statewide in California, with double digit increases in most counties through the state according to statistics on the California Association of Realtors website.

Click Here >> for median home price statistics by California County

Recent Refinance Success Stories

In October, we told you about one success story where the appraisal for a CalSTRS 80/17 refinance came in unexpectedly much higher than we need and the homeowner was able to reduce the interest rate from 5.25% to under 4%, saving them hundreds a month.

Increase in value resulted in ability to refinance from 6.75% to 3.25%!

This week, we are closing another CalSTRS 80/17 refinance that was expecting to bring in a significant amount of money to buy down the 17% second mortgage in an attempt to take advantage of lower rates.

Once again, the appraisal came in higher than expected, resulting in the homeowner having to bring in much, much less money than expected and resulted in an interest rate reduction from 6.75% to 3.25%!

It’s All About the Math

We are cautiously optimistic about home values continuing to rise which will open up even more opportunities for homeowners wishing to refinance into a lower interest rate loan.

It always comes down to the numbers.  The math will ultimately give you the information you need to make an educated decision about your individual options.

If you would like us to run the numbers on your CalSTRS 80/17 and look for savings opportunities, you may contact us by leaving a comment below, click the HELP tab on the right side of this page, send me an email or give us a call anytime.

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