Posted on: 12th Mar, 2009 08:48 pm
I am a single mom of one. I have been in my house for about five years, and after some financial difficulty and almost losing my house once, I currently have a fixed rate loan with a payment of over $2,100/month and I'm upside down on my house by about $30,000. My monthly payment is about 50% of my monthly income.
I have savings and retirement investments, but I am 42 and don't want to use those up to pay my mortgage. I am also gainfully employed with steady work and in no danger of losing my job. My credit rating is 830 (this is not a typo).
I am waiting for a call back from my lender to see if they can help my by adjusting the terms of my loan somehow. But I am seriously considering letting the bank foreclose on the house. In doing so, I can rent a more suitable home for a price I can better afford in a better school district for my child, and I can provide a better life for both of us.
How do I do this? Is it advisable? And what are the consequences? I know these are big questions, but any help would be greatly appreciated.
I have savings and retirement investments, but I am 42 and don't want to use those up to pay my mortgage. I am also gainfully employed with steady work and in no danger of losing my job. My credit rating is 830 (this is not a typo).
I am waiting for a call back from my lender to see if they can help my by adjusting the terms of my loan somehow. But I am seriously considering letting the bank foreclose on the house. In doing so, I can rent a more suitable home for a price I can better afford in a better school district for my child, and I can provide a better life for both of us.
How do I do this? Is it advisable? And what are the consequences? I know these are big questions, but any help would be greatly appreciated.
Hi jenniferserpa,
If you decide to walk away from the proeprty, the bank will foreclose on it. If the lender cannot recover the balance loan amount by selling the property they can ask for the deficiency amount and can even pass a deficency judgment against you and garnish your wages. The foreclosure will drop your credit down by almost 250 points or more and will show on your credit for 7 years which will make it difficult for you to find another loan in future.
If you decide to walk away from the proeprty, the bank will foreclose on it. If the lender cannot recover the balance loan amount by selling the property they can ask for the deficiency amount and can even pass a deficency judgment against you and garnish your wages. The foreclosure will drop your credit down by almost 250 points or more and will show on your credit for 7 years which will make it difficult for you to find another loan in future.
Before you walk away from that great credit rating, and home... give your lender a call and ask them about a loan modification option.
It never hurts to ask, but they may consider a princ. reduction on the home if it is that much upside down. Let them know your situation, be honest and see if they can help.
Either way, it is worth a shot... because in 2 or 3 years you will probably regret the Foreclosure ever happened. A lot of people are bailing right now, but maybe they are jumping out of the home ownership window a little too quick. If things turn around in a next 12-18 months there will be a lot of folks wishing they still had their homes.
Just my opinion, best of luck!
It never hurts to ask, but they may consider a princ. reduction on the home if it is that much upside down. Let them know your situation, be honest and see if they can help.
Either way, it is worth a shot... because in 2 or 3 years you will probably regret the Foreclosure ever happened. A lot of people are bailing right now, but maybe they are jumping out of the home ownership window a little too quick. If things turn around in a next 12-18 months there will be a lot of folks wishing they still had their homes.
Just my opinion, best of luck!
I am desperate and would appreciate any insight that you can provide. I bought a house for $188,000 in Chicago in June 2007. My mortgage is now upside down and houses on my block are selling for half of what I paid 2 years ago. My monthly note, including PMI because I paid no money down, amounts to just under $1600.00. It would be easier to make my monthly payment, which I can afford because my husband and I are both employed, if this was at least the home that I wanted. But it's not. This is the house I settled for because it was what I could afford. It is very small, about 774 sq feet, and in need of several repairs. I have already bought new windows, new furnace, central air conditioner and rebuilt the porch since we have been here. I do not want to invest anymore money into this house, which still needs repairs, because I do not think I would ever make it back. My family tells me that I should hang on till the market rebounds, but what if I still can not recoup what I have invested. Besides that, at $1600.00 a month, how can I ever save a down payment for another home. The bank, Wells Fargo, is not willing to help me because I am not behind on my payments. I am a law abiding citizen and if you could check my credit, you would see that I pay people when I owe them, but I really want to walk away from this house. My having bought a home without a down payment just amounts to smoldering ignorance. Several people told me that I didn't need a down payment to buy a home, and with 2 small kids in a one bedroom apartment, I thought, cool. Not thinking it's so cool anymore!!