Posted: Thu Mar 06, 2008 2:06 am Post subject: Keep making payments or not ?
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Hello all, I am in dire straights. I am in an awful loan, and maybe upside down on my loan at this time. My husband and I are divorcing, he is not contributing, and I my lender wont/cant help me. Should I just keep making my minimal interest only payment or just walk away? I am getting mixed advice due to my situation. I need to support my kids and in the long run, I will lose the house anyway, but dont know what to do besides try to sell it ASAP. Will they kick us out on the streets if I dont get my payment to them by the 15th? This is the first time I will have missed a payment or have been late so any help will be greatly appreciated. How much will this destroy my credit? And will we be able to at least be able to rent somewhere if the house forecloses? Sorry for so many questions, I am just so overwhelmed and dont know where to start or what to do.. Thanks again.
Please don't be so worried. It is a tough time for you no doubt but you have to fight and come out of this mess. Is your husband on the loan along with you? Didn't you inform the lender that your husband isn't contributing, so it's getting harder to repay? I suppose the lender will have different workout plans for those having similar situation as yours.
You mentioned the 15th, what is it? the payment date for every month? and you have been late once is it? If you are employed, you can think of refinancing the loan in your name only and possibly you can a lower rate too and one without having interest-only payment option. _________________ Procrastination is the enemy of your financial success
call the lender and talk to your divorce attourney on this your husband should contribute if he is able.
As far as making the payments. Can you make them and still feed yourself and the kids? Is there living arrangements out there that will allow you to rent enough living space cheaper? Are you going to be getting alimony or child support soon and therefore will have increased income?
Is there someone willing to help you ( a relative or a friend)? Can the judge order your husband to pay?
As far as missing a payment if you miss a payment you will not get kicked out of your home but it will be a bad hit to your credit. In many cases you can miss up to 4 payments b4 foreclosure will start and then you will have as much as another 6 mon to 1yr+ before you have to leave your house. (check with your state legislature )
So you can continue paying as long as you can if you dont have other living arrangements and can make the payments (or force your husband to take the responcibility), you can sell the house if you can sell it for profit or maybee arrange a short sale and make other living arrangements, or you can let the property into foreclosure and have about a year rent free living ( ruins your credit and eligibility down the line) _________________ Eugene Volovik
Home Loan Consultant
Countrywide
612-481-3127
Conventional, FHA and Commercial Lending in 48 states
Thank you so much!! My situation is 1) husband doesnt have a job, 2) our loan was already sub-prime (8.5%) and interest only payments are $3400. With my income the most I can afford each month (right now) is $1700. As far as refinancing, they told me I would owe pre-payment penalty of $18000 (6 months interest, and adding that to the loan (currently $400,000) puts it at $418K thus, jumbo loan, more interest. Is there creative financing out there that would allow me to have a payment of $1700 for up to 5 years? or so? and God willing, equity will build up and I can possibly get into a normal loan? The lender totally had me - I am usually not so naive, but he showed me the wording in the contract that said we could refinance after 12 months with no penalty but of course I call the lender (Countrynarrow) and they said nope nope nope, there is a 3 year prepayment penalty... Pitiful! So anyway, back to the question . Is there any type of loan that could help me keep my house? I really do want to stay here for another 10 years but obviously, not with the payments where they're at. My credit score is within the 'good' range, not any late payments on my mortgage, or my credit cards etc. I looked on the calculator to see amount of loan my salary qualifies for and its not the $400K i need.. Are there 40, 50 year loans? or loans that have a fixed payment for x amount of years, and then ?? or should I just hang it up?
Thank you all again for the support, I am so very glad I came upon this site, it was just what I needed. And reading other posts, the community, lenders etc. are awesome. Thank you !![/size][/size]
Posted: Mon Mar 10, 2008 12:28 am Post subject: RE: take 401k loan if you cannot refinance
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Hi Wanderlinghs,
Welcome to our forums.
I can understand your situation very well. The prepayment penalty that you need to pay is a good amount so unfortunately refinancing won’t be the option here as you'll have to pay for the costs of the new loan as well.
There are loan options such as 5/1 year ARM which you can go for considering the fact that you need a fixed rate for 5 years and then perhaps you wouldn't stay in this property at all. But the problem is, whoever loan you go for, you will have to refinance and that implies paying a lot of interest as penalty in your case. Are you comfortable paying such a big penalty? I doubt whether you'll be ok with it.
Well, let me suggest one option, though not a very good one but at least a way put in your situation. Do you have a retirement savings plan? You can consider taking out loan using a debit card from such accounts. Check out the information available here on 401k/403b loans .
Alternatively, as I said there are many options and 40 year, 50 year loans are among them but they are very long term loans. You were asking for something for 5 years isn't it? Here again you'll have to refinance or else what would you keep as the collateral except your house. Do you have a second home?
There may be some good news depending on your credit. FHA just increased the loan amount limit in high cost areas. If you are in one of them, you may be able to get an FHA loan at a reduced interest rate and more flexible underwriting. Hope this helps to some degree. _________________ Lisa Scherzer
Allpointe Mortgage
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