Posted on: 14th May, 2011 07:10 pm
My home is currently under water. In January 2011, it appraised for $1,500,000 but I owe $2,199,000 on an interest only loan. I want to convert to a loan with both interest and principle payments so that I can pay down the balance on the loan. How can I do this?
You can always pay principal towards your mortgage, the concern will be if your mortgage has a prepay penalty where if you do pay down principal at a rate higher than the mortgage note permits, the prepay penalty will be triggered. Usually you have to pay down the mortgage balance more than 20% in any 12 month period in order for that to happen, but each mortgage could be different. Read your documentation, or if you do not understand or cannot find it, call up your lender and ask if you have a prepayment penalty.
Guest - where is your home located?
how are you going to refinance if you are currently $700,000 underwater? actually if that's where you were at in january, you probably are more underwater now.
to just get to an 80/20 loan to value ratio you would need to get the balance down to $1,200,000. that means you need to come up with about $1,000,000, maybe more, to pay down the loan balance.
though i am not recommending it, you are in a spot where many people are doing a strategic default. seek some legal counsel on this as i don't think there is any lender out there who is going to be able to help you with this one, short of coming up with a bucket load of cash.
to just get to an 80/20 loan to value ratio you would need to get the balance down to $1,200,000. that means you need to come up with about $1,000,000, maybe more, to pay down the loan balance.
though i am not recommending it, you are in a spot where many people are doing a strategic default. seek some legal counsel on this as i don't think there is any lender out there who is going to be able to help you with this one, short of coming up with a bucket load of cash.
Hi Guest!
Welcome to forums!
Unless you've equity in your property, you won't be able to refinance the mortgage. As there is no equity, none of the lenders will be ready to refinance the loan.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
Unless you've equity in your property, you won't be able to refinance the mortgage. As there is no equity, none of the lenders will be ready to refinance the loan.
Feel free to ask if you've further queries.
Sussane
It'd seem that this homeowner isn't interested in a strategic default; rather would prefer to continue owning the home while obtaining assistance in the financing.
Guest, I think you need to start close to home. Talk to your current lender and see what solutions they can come up with. Remember, they're in the same boat you're in - they created the interest-only loan you closed with, and while they're able to make a few shekels with the collection of that interest, they're in a losing position should you ever default.
Call them right away and have this discussion.
Guest, I think you need to start close to home. Talk to your current lender and see what solutions they can come up with. Remember, they're in the same boat you're in - they created the interest-only loan you closed with, and while they're able to make a few shekels with the collection of that interest, they're in a losing position should you ever default.
Call them right away and have this discussion.
