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prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

In two years, my ARM is up. It is interest only. My house is not worth what I paid for it, I will be upside down who knows, maybe $25k by then. My finance company won't refinance, and none of these "mortgage solution" companies will help because they loan is not from Fannie Mae or Freddie Mac. Before anyone jumps on me for buying a house I can't afford, stop right there. The house was 282k, I put 30k down, just wasn't anticipating that it would lose so much value and would have trouble refinancing it. I can afford the house, I just need it to be a 30 year fixed, not whatever BS rate I'll get once the A.R.M. is done. Is it possible that if I'm 25k upside down I could just get a personal loan for that amount, put it towards the house, then refinance? I have flawless credit, and by the time I need to refinance, I will be virtually debt free otherwise.

smithsussane · Posted: Mon May 16, 2011 11:31 pm Post subject:

Hi prtdvl!

Welcome to forums!

If you meet the required criteria of the personal lenders, you can go for a personal loan which will help you in building up equity in your property. Then, you will be able to refinance the existing mortgage. However, you should note that the personal loan will be available at a higher interest rate.

Feel free to ask if you've further queries.

Sussane

prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

I'll try talking to my lender. It would seem ridiculous for them to not work with me when I've never been late, have great credit, and will be free from all my other loans, credit cards, and auto loans by then. If the rate goes up too high when the A.R.M. is done, and I walk away or short sale it, what do they gain? It would seem that if they work things out with me, they end up making out better by financing the house for the $257k I owe, as opposed to someone buying it for the $225k it's now worth.

I'm fine paying what I owe as long as the rate isn't ridiculous. I won't be so upset about necessarily losing *this* house, I just hate that it will ruin my chances for buying another house most likely (credit wise). I have until Sept of 2013, but I'd like to head this issue off now and start planning

gmakerley · Posted: Tue May 17, 2011 7:02 am Post subject:

I commend you for bringing up the topic at this point rather than waiting until the last minute. Honestly, I don't see $25K as the stumbling block that you do, but of course I'm not in your shoes, either.
Real estate values vary on a regular basis, and from most estimates, we've seen what is pretty much the bottom of the market. At this time, depending (of course) on the area in which you're located, we ought to begin seeing values increasing. Obviously, they won't be as before when we had the overly-inflated increases that were a large factor in the economic bust.

I agree that your lender would be well-advised to work with you. If you've already had discussions in that vein with them, I'd suggest you escalate those discussions as best you can to help them begin to see the light. As for those "mortgage solution" outfits you cited, the only solutions they're interested in involve replacing money that comes and goes from their own pockets. In dealing with your lender, you'd be wise to seek the assistance of a HUD-approved counseling agency or NACA. Investigate any programs your state may have that are designed to assist borrowers in similar situations as you're in.

There is, truly, light at the end of the tunnel. I count myself as one of those who do not advocate simply bailing out, so my advice is skewed in that direction, but I also do believe that working to rectify the situation is a far better option than simply walking away.

prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

I'll see what my lender says and will keep you posted. Been reading up on short sales and deed in lieu. Lots of stuff to take in. I'd really like to keep the house, simply because I love the town, and I HATE moving.

Guest

Why don't you apply for loan modification? It may help you save your property.

prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

Because I've never been late, nor have a "hardship", they won't deal. Well, I guess I should say "wouldn't", because the loan just got bought out by another bank. The last company I tried dealing with is National City Mortgage.

gmakerley · Posted: Tue May 24, 2011 11:15 am Post subject:

There's a major disconnect in the modification world. For many homeowners, it's been a matter of under-employment, unemployment or a combination of the two that prevented them from making payments on time. When a borrower's unemployed, of course, the lenders won't work with you. You must be employed and earning an income in order to qualify for a modification. Of course, pensioners and other retirees are included in that as well, in many cases.
But if you can't make payments because you don't currently have a job, there's no way they can work up a modification for you. It's a tough spot to be in.

prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

Been with the same company for 18 years, flawless credit. Only problem is, my house tanked in value.

gmakerley · Posted: Wed May 25, 2011 10:56 am Post subject:

Given the cyclical nature of real estate values, doesn't it make sense for you to continue in the home, keep the mortgage up-to-date and reap the benefits of the eventual turnaround in values?

Over time, we've seen drastic increases as well as decreases, and in pockets of the country, values have drifted upward - admittedly not everywhere, of course.

Your interest-only deal does not limit you to paying only the interest, I'm sure. Wouldn't it behoove you to add an additional sum of principal curtailment with each interest-only payment?

Has the lender addressed the reduced value in the discussion about modification?

unab · Joined: 25 May 2011 Posts: 68 9.62 Dollars($)

Loan Modification is the best option. Please try that.

prtdvl · Joined: 16 May 2011 Posts: 6 2.38 Dollars($)

Right now, I can't afford to put up more than the interest only payment. I spoke to them yesterday, it turns out I am actually in a 10-year A.R.M., but only the first seven are fixed. The next three years are adjustable, interest only. I guess after the 10 years are up, I only get 20 years to finance the house unless I refinance. As of now, with rates the way they are, if the A.R.M. was up today, my payment would actually go down $700 a month being interest only.

gmakerley · Posted: Thu Jun 02, 2011 1:45 pm Post subject:

That's the funny thing with adjustable rates - they actually do go down as well as up. Lots of the fear that's been in the marketplace in the last few years was due to the common assumption that rates would adjust upward (and to the max, at that). Now you can't expect the next change date to mirror what's happening at the moment, necessarily; but you can have hope in thinking that the damage has already been done for the most part, and that rates will make it easier in general down the road.

Let's hope and pray that I'm at least a bit on the right side.

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