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How To Refinance Your Condo

"Historically, we've always had three comparables on an appraisal," Metzler explains. "Today, you see four or five a lot. But when you're doing (a loan for a property) in an association, you have to pull the majority of the comps out of that same project."

That means the appraiser will have to use at least two or three comps in your complex to determine the value of your condo, even if other similar condos sold for higher prices nearby. If no useable comps exist in your complex, the appraiser will have to justify why other comps were used.

The HARP option

One way to skirt around the condo association and appraisal issues is to refinance through the Home Affordable Refinance Program ( HARP), which can be used if you have a conventional loan, occupy your condo as your principal residence and your loan-to-value ratio is at least 80 percent.

"HARP says, 'We don't care about the status of the association,' which is nice because you don't have to go through all the rigmarole," Metzler says. "It's pretty much clear to go."

Rented out

If you've moved out of your condo, the rules change because, as Lopatin explains, your loan will be considered an investment refinance. That means your interest rate likely will be higher and you'll need at least 20 percent equity to refinance. Equity is a must because mortgage insurance generally isn't an option for non-owner-occupied properties.

If you're short of equity, you can do what's known as a cash-in refinance, in which you bring cash to closing to boost your equity to the 20 percent level.

"It may make sense to take $10,000 or $20,000 out of your savings -- from one pocket, so to speak, to another -- to increase the cash flow and make that investment property more profitable," Lopatin says. "That's a great strategy if it's within reach and you have the liquidity. Not everybody does."

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