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01-31-2013 12:04 PM
Hello - I currently own a home that is anywhere between 50-100K underwater with a mortgage of 320K, and an interest rate of 6.25%. Since I don't have a freddie/fannie/FHA loan I don't qualify for a refi under the HARP program. I have a third party "investor"...Bank of the West. I also don't appear to qualify for any other assistance programs since they say I make too much money. But I can tell you a $2500/mo mortgage on a single income is not easy! So...I can't sell the property, or get anywhere close to the mortgage for rent, and I can't refinance it. What should I do? Unless, there is some relief in sight for people like me who are in that no mans land area: up to date with their payments, but stuck with a mort they can't refi on a house they will likely never see their investment back on...perhaps my only good option is to walk. I was also under the impression that as of 2013 the tax law changed making the owner responsible for the taxes associated with the loss on the house. Is this true? I could really use a little guidance here or understand if there are other options I haven't yet considered.
02-01-2013 01:15 AM
The debt relief law has been extended for 1 more year so you don't have to worry about that right now. Prices in sacramento have started to rise so if you can hold out a year or two you might not be underwater. It is a long shot but have you talked to the bank about principal reduction. The government has been offering incentives to banks and it just might work, especially in your bank was one of the ones that was sued by the government and agreed to a settlement.
Just remember your credit rating will take a hit if you dump it. Some banks are more willing to work with you if you fall behind in your payments. If you decide to go that way and it doesn't work out, and least you will have some cash when you move.
02-01-2013 08:39 AM
It is a hard time still for many Homeowners in America though the media would have you think we are in an upswing and that everyone is back on track. If you would like to discuss options please contact me firstname.lastname@example.org or 530 320 3032. We can discuss your situation in detail and I can let you know how past clients in similar situations handled things in hopes of finding out what option best fits your needs.
Do NOT LET THE BANK PUSH YOU AROUND, you still have control of your home you just need some education on your options that the bank does not want you to hear...
02-02-2013 02:18 PM
I think you have to decide if you love your home or not, and if you do then try to keep it. I'm a Broker not a lender but I thought I'd heard about some financing available at 125% of value. I'm making some assumptions on the info you have below but 125% of $320k is $400,000. If you are $80k or less underwater this may work for you. Take $400k at 3.5% which is a little high today if your credit is good, and you have a principal and interest payment of $$1,796.18. That might be more up your alley
Check with your bank first to see if they have this financing available, and if not check around. If you need a hand you are welcome to contact me.
Hope that gives you an idea or two!
Julie Stadel, Broker
02-06-2013 12:34 PM
Say your house is worth $250k. It will need to grow in value to $355k for you to break even after cost of selling the house. This is about 42% price appreciation from today. RE is not supposed to grow faster than inflation, regardless of what your "impartial" RE agent tells you. Historical price growth paterns are irrelevant.
Also, if you are overpaying about 3% on your mortage interest, you literally gifting about $10k/year to the bank. So every year this "break even" threshold goes up by $10k from $355k today. May be find a good rental first and buy a new car, but then dump this house. Your credit score does not pay you royalties. Yes, there are savings with higher credit score, but are there $200k in savings associated with higher credit score over the next 10 years? BTW you credit score will be back in 7 years anyway.
02-06-2013 01:33 PM
Julie's logic is nothing short of predatory lending. This is what she offers you to do:
1. go to the bank and ask for $320k loan
2. spend $250k of that buying your same house again
3. take remaining $70k, burn it, but pay it back to the bank as part of your scheduled monthly payments.
It makes sense to borrow $250k to buy a house that you don't othewise have money for. You know, it is fair, you ask for money, they charge you interest, you get your house. #3, though, does not make sense, unless you are mortgage broker or Julie, who wants you keep you in your house at all cost (to you).
So next time you buying your Honda, do this. If they sell it for $20k, ask to pay $30k, just because, you know, you can finance it. Since you know, Julie told you it is a good idea.
02-19-2013 04:15 PM
@Mountainman, I think Julie's advise was right given the fact that most people do not buy homes as an investment but as a home and therefore was trying to help her keep it. Her advise makes sense if she wants to keep the house, as this is the only way to reduce the payment without ruining her credit. Now if she was looking it at investment purposes, would probably make sense to dump it.