Posted on: 13th Aug, 2007 12:13 pm
here is the deal. i signed a mortgage that was fixed for 3 years at 8.25%. after the 3 years they raised the interest rate to 8.75%, not to much and not impossible to reach. i just received a letter from them stating that they are raising the interest up to 11.25%. there is no way that i can afford to make that type of house payment. i can not refinance as the houses in the area i live are going for about $15, 000 less then what i owe on my house.
what am i suppose to do now? i am very willing to walk away from the home, it is in need of about $8,000 worth of work to be done on it.
i would like to go with a deed in lieu of foreclosure, is that even possible? the new house payment would start september 1. at this point i am not behind at all.
please tell me what steps i should take. i have a family, and there is just no way that i can afford to make over a $1,000 house payment a month and still feed and clothe my kids.
thanks for your help.
kim sturm
what am i suppose to do now? i am very willing to walk away from the home, it is in need of about $8,000 worth of work to be done on it.
i would like to go with a deed in lieu of foreclosure, is that even possible? the new house payment would start september 1. at this point i am not behind at all.
please tell me what steps i should take. i have a family, and there is just no way that i can afford to make over a $1,000 house payment a month and still feed and clothe my kids.
thanks for your help.
kim sturm
Hi Kim,
A deed in lieu is possible but the lender won't consider it until the loan is in default and presently you are current with the payments.
When the loan is in default they will ask you to send a hardship letter stating the financial problem because of which you are not in a position to make the payments and want a dil option to be considered.
After going through your hardship letter they will let you know if it would be possible to give the house back to the lender with a dil or not.
Miller
A deed in lieu is possible but the lender won't consider it until the loan is in default and presently you are current with the payments.
When the loan is in default they will ask you to send a hardship letter stating the financial problem because of which you are not in a position to make the payments and want a dil option to be considered.
After going through your hardship letter they will let you know if it would be possible to give the house back to the lender with a dil or not.
Miller
Did you try selling the house? If it would be possible to sell then it will save your credit from dropping because of the deed in lieu.
"I just received a letter from them stating that they are raising the interest up to 11.25%."
Is your loan an ARM? If it is an arm loan then you should be able to know when the loan rate is going to adjust and work accordingly.
You should have tried refinancing when the rate went up to 8.75%.
But why there is such a big jump in rate from 8.75% to 11.25%? Has lender given details of the interest rate increase? How many years have passed since the rate changed to be 8.75%?
Is your loan an ARM? If it is an arm loan then you should be able to know when the loan rate is going to adjust and work accordingly.
You should have tried refinancing when the rate went up to 8.75%.
But why there is such a big jump in rate from 8.75% to 11.25%? Has lender given details of the interest rate increase? How many years have passed since the rate changed to be 8.75%?
Hello Kim,
I could feel in what state of mind you are as have to feed your family also. And I suppose you have taken an ARM loan.
Now what you can do is to refinance the loan by taking a new fixed rate loan with a lower interest rate. With a fixed rate loan, you can be aware of the payments that you have to make every months and can also save some amount of money to bear the expenses towards your family. To know more on refinance, please refer to: http://www.mortgagefit.com/refinance.html
I could feel in what state of mind you are as have to feed your family also. And I suppose you have taken an ARM loan.
Now what you can do is to refinance the loan by taking a new fixed rate loan with a lower interest rate. With a fixed rate loan, you can be aware of the payments that you have to make every months and can also save some amount of money to bear the expenses towards your family. To know more on refinance, please refer to: http://www.mortgagefit.com/refinance.html
Hi Kim,
If you go for a deed in lieu of foreclosure, it will have a negative effect on your credit score and it will reflected on your credit report for 7 years.
You should better talk to your lender and ask him for loan modification or any other alternative repayment plan. You will have to properly make him understand your situation and find out a suitable solution.
If you go for a deed in lieu of foreclosure, it will have a negative effect on your credit score and it will reflected on your credit report for 7 years.
You should better talk to your lender and ask him for loan modification or any other alternative repayment plan. You will have to properly make him understand your situation and find out a suitable solution.
This talk of deed in lieu raises an interesting question. Where's the hardship? What has happened is nothing more than Kim knew when she took the loan. A simple decision of opting for a lower initial interest rate or maybe even the ability to obtain ANY mortgage. Still a choice Kim made. No indications or a job loss or major, unexpected health situation. I’m not even sure a lender would consider a DIL for the sole reason of adherence to the terms of the mortgage.
I guess this is the new American spirit. Choices don't have consequences.
I guess this is the new American spirit. Choices don't have consequences.
Thank you to everyone for their suggestions. I would like to address this comment:
"This talk of deed in lieu raises an interesting question. Where's the hardship? What has happened is nothing more than Kim knew when she took the loan. A simple decision of opting for a lower initial interest rate or maybe even the ability to obtain ANY mortgage. Still a choice Kim made. No indications or a job loss or major, unexpected health situation. I’m not even sure a lender would consider a DIL for the sole reason of adherence to the terms of the mortgage.
I guess this is the new American spirit. Choices don't have consequences."
When I took the refinance at 8.25% that was my second time refinancing so no it wasnt to get ANY mortgage. It was actually .25% higher than I had paid orginally. Like I said, it was locked for 3 years, when the 3 years rolled around it went up to 8.75%. The following year Sept. 2007, it went up to 11.25%. When I did the refinancing the market was good there was no indication that the market was going to fall the way it did. And yes I was stupid for not getting it fixed for the life of the loan...my bad...but raising it almost 3 points it just rediculous. And I would have to disagree with you because obviously my choices do have consequences...my credit score will lower, and there is a very good chance that when the house goes up on the auction block that I will end up having to pay the difference between what it is sold for and what I borrowed.
"This talk of deed in lieu raises an interesting question. Where's the hardship? What has happened is nothing more than Kim knew when she took the loan. A simple decision of opting for a lower initial interest rate or maybe even the ability to obtain ANY mortgage. Still a choice Kim made. No indications or a job loss or major, unexpected health situation. I’m not even sure a lender would consider a DIL for the sole reason of adherence to the terms of the mortgage.
I guess this is the new American spirit. Choices don't have consequences."
When I took the refinance at 8.25% that was my second time refinancing so no it wasnt to get ANY mortgage. It was actually .25% higher than I had paid orginally. Like I said, it was locked for 3 years, when the 3 years rolled around it went up to 8.75%. The following year Sept. 2007, it went up to 11.25%. When I did the refinancing the market was good there was no indication that the market was going to fall the way it did. And yes I was stupid for not getting it fixed for the life of the loan...my bad...but raising it almost 3 points it just rediculous. And I would have to disagree with you because obviously my choices do have consequences...my credit score will lower, and there is a very good chance that when the house goes up on the auction block that I will end up having to pay the difference between what it is sold for and what I borrowed.
"And yes I was stupid for not getting it fixed for the life of the loan...my bad...but raising it almost 3 points it just rediculous."
Did you check your loan documents? Details of how the rate would change (margin, index, caps...) must be stated there.
Did you check your loan documents? Details of how the rate would change (margin, index, caps...) must be stated there.
Hi Kim,
Welcome back to forum.
You have made the fault of not verifying the fluctuating rates of the loan at the initial time of taking the loan. You should better try to negotiate with the lender and ask him to find out a solution which would help to get you out of paying these higher rates.
Welcome back to forum.
You have made the fault of not verifying the fluctuating rates of the loan at the initial time of taking the loan. You should better try to negotiate with the lender and ask him to find out a solution which would help to get you out of paying these higher rates.
Hey Kim dont let them put you on a guilt trip, the only thing you did is believed in a better future. I have been doing mortgages for 6+ years and if anyone that is at fault here is the banks that have made these loans available in the first place. It worked for them when they were making money and now they blame the consumer and loan officers for all the crap that is happening.
As to your question you mentinoned you owe 15k more then the house is worth and the rate on your mortgage is adjusting.
You can do one of the following things.
1. Continue paying on your home as paymenst and interest rates grow.
2. Attempt to sell a house and do a short sale (you will have to pay remaining balance on the house)
3. Do a deed in lieu of foreclosure. Same thing as foreclosure in all respects that consern you such as credit hits and problems assosiated with it.
4. Foreclosure - stop paying. And live as long as they let you (rent free untill the sherifs sale) and save your money for renting an appartment. (your credit will be ruined and chances are you willl not buy a new home for a while but the way things are going you might not want to)
5. See if bankrupsy is a solution for you.
6. Take a personal loan paydown your mortgage and refi into 30 yr fixed. ( make sure you can afford it othervise ou will be in the same situation 6 months from now)
As to your question you mentinoned you owe 15k more then the house is worth and the rate on your mortgage is adjusting.
You can do one of the following things.
1. Continue paying on your home as paymenst and interest rates grow.
2. Attempt to sell a house and do a short sale (you will have to pay remaining balance on the house)
3. Do a deed in lieu of foreclosure. Same thing as foreclosure in all respects that consern you such as credit hits and problems assosiated with it.
4. Foreclosure - stop paying. And live as long as they let you (rent free untill the sherifs sale) and save your money for renting an appartment. (your credit will be ruined and chances are you willl not buy a new home for a while but the way things are going you might not want to)
5. See if bankrupsy is a solution for you.
6. Take a personal loan paydown your mortgage and refi into 30 yr fixed. ( make sure you can afford it othervise ou will be in the same situation 6 months from now)
"I have been doing mortgages for 6+ years and if anyone that is at fault here is the banks that have made these loans available in the first place. It worked for them when they were making money and now they blame the consumer and loan officers for all the crap that is happening. "
Well the bank cannot be held as totally responsible for this situation. It is true that they should have made the terms clear and the risk borrower would be taking. But borrower is also required to understand payment affordability before selecting a loan.
Kim should not feel guilty about anything. It could have been that rates stayed as they were previously and payments remained affordable. But as it is now, rates have gone so high that it has become difficult for her to continue the payments.
Well the bank cannot be held as totally responsible for this situation. It is true that they should have made the terms clear and the risk borrower would be taking. But borrower is also required to understand payment affordability before selecting a loan.
Kim should not feel guilty about anything. It could have been that rates stayed as they were previously and payments remained affordable. But as it is now, rates have gone so high that it has become difficult for her to continue the payments.
Thanks so much for your help. You have given me alot to think about. Im just really scared about the whole situation, I mean I was just making my house payments as it was and then they do this. Ugh!!! I dont want to have to do it but at this point Im really having a hard time figuring out what else to do.
Again, thanks for all your help. When its all said and done I will stop back by and let you know the outcome.
Kim
Again, thanks for all your help. When its all said and done I will stop back by and let you know the outcome.
Kim
Hi Kim,
Please feel free to update us on what happen next. And if you have any further query, don't hesitate to ask.
Please feel free to update us on what happen next. And if you have any further query, don't hesitate to ask.
Hi Kimstrm,
I will agree with others here. The lender will probably not accept your deed-in-lieu until and unless you are in default and inform him that you're in some kind of financial problems. So, what you can do is, sell the house for whatever amount you're getting and then pay off the balance of the loan, if you can gather the funds required for it.
It's better not to hurry and file a bankruptcy or go for a foreclosure at this moment of time. It will affect your credit negatively and your score will thus go down and the credit report will reflect this for 6 to 7 years. And, if you wish to verify whether you really cannot pay for the loan, why not seek credit counseling advice. The credit counselor can prepare a budget for you after analyzing your financial status. And believe me, a well-planned budget does help.
Hope this information will be helpful for you.
God bless you.
Samantha
I will agree with others here. The lender will probably not accept your deed-in-lieu until and unless you are in default and inform him that you're in some kind of financial problems. So, what you can do is, sell the house for whatever amount you're getting and then pay off the balance of the loan, if you can gather the funds required for it.
It's better not to hurry and file a bankruptcy or go for a foreclosure at this moment of time. It will affect your credit negatively and your score will thus go down and the credit report will reflect this for 6 to 7 years. And, if you wish to verify whether you really cannot pay for the loan, why not seek credit counseling advice. The credit counselor can prepare a budget for you after analyzing your financial status. And believe me, a well-planned budget does help.
Hope this information will be helpful for you.
God bless you.
Samantha
Kim, a few posts ago, someone suggested you continue to make payments and try to ride out the storm. If this will work for you, this is the best advice I have seen. Foreclosure, bankruptcy or deed in lieu are all worst-case scenarios that will not help you much, other than get you out from under the current situation. If that is your solution, be aware of all that it will do to you for the future.
Another suggestion was taking a personal loan to paydown the mortgage and then refinance. I don't know what world this person is from, but the likelihood of getting a personal loan for that purpose is pretty slim. Not only that, but with all the changes in the marketplace, obtaining a new 100% ltv loan to refinance is so unlikely as to be nigh impossible.
If you have no real solution other than to lose the home, so be it. In the meantime, as suggested, save as much money as you are able in the interim.
I wish I had a better idea for you, but truly there are no easy answers in this situation.
Another suggestion was taking a personal loan to paydown the mortgage and then refinance. I don't know what world this person is from, but the likelihood of getting a personal loan for that purpose is pretty slim. Not only that, but with all the changes in the marketplace, obtaining a new 100% ltv loan to refinance is so unlikely as to be nigh impossible.
If you have no real solution other than to lose the home, so be it. In the meantime, as suggested, save as much money as you are able in the interim.
I wish I had a better idea for you, but truly there are no easy answers in this situation.