Posted on: 12th Mar, 2010 07:01 am
hello, i'm hoping someone can answer a few questions for me. we currently have a 30-yf fixed rate loan with wells fargo at 6.25%. we purchased our home in late 2008. since then several things have happened:
it was a new home, so not tax information was available. someone underestimated what they should be and therefore the bank escrowed less than necessary. this caused our total monthly loan amount to increase by $400. then, taxes went up later in 2009 and our escrow amount increased again over $100. so, our monthly mortgage payment went up by about $500.
then, last summer, my husband was hurt and couldn't work for about 4 months, and although he colleced a s/t disability payment for 3 of these months, it wasn't enough and put us in a difficult situation, having to use credit cards. then, last december, he lost his job, but thankfully, found another one relatively quickly. however, he is now making close to $20k less than he did when we bought the house. needless to say, we are in hot water, struggling to make our mortgage payment, plus childcare for two kids, our jacked-up credit cards, cars we need to get to work, etc.
we have not defaulted in any payments, but have been a day or two late in making the payments a couple of times already as we struggle to get the funds in order to pay. i foresee the situation getting worse as we try to catch up.
essentially, the mortgage payment has increased by over $500, our income has decreased by almost $20k. we are not in default - yet.
does it make sense for use to apply for a loan modification? we did look into refinancing, but we'd have to roll in the closing costs, putting us close to very little equity left in the house (it has decreased in value by $25k) to save us barely $200/month which will not help that much. or should we try to refinance? if we apply for a loan mod and get denied, will that hurt our chances at a refi approval?
finally, will applying for a loan modification hurt our credit?
i guess i'm looking for advice on where to start. i'd hate to apply for a loan mod and get denied, and then have this hurt our chances for a refinancing. thanks in advance for any advice.
edited to add...
i just read aobut the debt/income ration. ours is 29% right now...which i think would disquaify us from a loan modification. is that right?
it was a new home, so not tax information was available. someone underestimated what they should be and therefore the bank escrowed less than necessary. this caused our total monthly loan amount to increase by $400. then, taxes went up later in 2009 and our escrow amount increased again over $100. so, our monthly mortgage payment went up by about $500.
then, last summer, my husband was hurt and couldn't work for about 4 months, and although he colleced a s/t disability payment for 3 of these months, it wasn't enough and put us in a difficult situation, having to use credit cards. then, last december, he lost his job, but thankfully, found another one relatively quickly. however, he is now making close to $20k less than he did when we bought the house. needless to say, we are in hot water, struggling to make our mortgage payment, plus childcare for two kids, our jacked-up credit cards, cars we need to get to work, etc.
we have not defaulted in any payments, but have been a day or two late in making the payments a couple of times already as we struggle to get the funds in order to pay. i foresee the situation getting worse as we try to catch up.
essentially, the mortgage payment has increased by over $500, our income has decreased by almost $20k. we are not in default - yet.
does it make sense for use to apply for a loan modification? we did look into refinancing, but we'd have to roll in the closing costs, putting us close to very little equity left in the house (it has decreased in value by $25k) to save us barely $200/month which will not help that much. or should we try to refinance? if we apply for a loan mod and get denied, will that hurt our chances at a refi approval?
finally, will applying for a loan modification hurt our credit?
i guess i'm looking for advice on where to start. i'd hate to apply for a loan mod and get denied, and then have this hurt our chances for a refinancing. thanks in advance for any advice.
edited to add...
i just read aobut the debt/income ration. ours is 29% right now...which i think would disquaify us from a loan modification. is that right?
Try the Loan Modification. I just recently completed a loan modification with the same bank and they work wonderfully with people. There is a program called HAMP that you may want to have Wells Fargo run for you first. If you do not qualify the bank will automatically submit your application for a different modification immediately and postpone any foreclosure proceddings that may be in effect. As far as for credit, I suggest asking the bank specifically how it effects your credit. Usually if there is a job loss from one of the two borrowers, meaning you or your spouse, then a modification is most likely considered. Its worth the try if you want to stay in your home instead of paying rent. Also there is a HOPE program you may call for free advice. They are great. 1.800.225.5342 Good Luck