Posted: Sun Aug 09, 2009 3:11 pm Post subject: Mortgage or retirement?
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Thank you for being there to help !
My husband and I are wondering what to do with our home. We owe 715,000, having paid 810,000 four years ago with an ARM 5 yr interest only mortgage on the first and a 15 year fixed at 6.5% on the second. This mortgage resets in less than a year and goes to a 25 yr fxed, which will be a higher monthly payment. We have lost a quarter of our income and know that we cannot afford to pay the new mortgage. We are not yet behind and have met with no success for a refi after checking out many sources. (We are told that we do not qualify based on the income to debt ratio). We are 56 and 60 years old and have no assets outside of some retirement funds. Should we just foreclose and save the 50,000 it would cost to sell our home (est. value is $780,000). Our credit scores are both above 800 and we have no debt. If we rent for the rest of our lives we can't see that we would need high credit scores. We really need to save for our later years. We were recently advised by a financial planner that foreclosure would actually be the wise financial move, but are we missing something? We live in CA and are also wondering if we are at risk for wages garnished, taxes, other deficiency judgements. Also, would a loan modification offer much in this case and do we have to fall behind on our payments before applying for one? Thank you.
If you want to save the property, then a loan modification can be a good move. You should inform your lender about your financial situation and apply for a loan modification. If the lender accepts your request, then you would be able to save your property as well as your credit. The lender will lower your interest rate and increase your term of loan payment under the modification program.
If the lender does not accept your request for loan modification, then you should let the lender foreclose the property. As far as I know, in California, the lender will not come after you for the deficient amount resulting from the sale of the property. _________________ Procrastination is the enemy of your financial success
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jpwoodsjr
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