Anonymous asked in Business & FinanceRenting & Real Estate · 1 decade ago

I need to refinance my home....?

I chose to refinance my home about three years ago, and the mortgage broker told me about this ARM/ interest only loan that was this "wonderful" option... or so she said. My hubby and I did this. Here we are, three years later, trying to get out for this ARM loan and back into a 30 year fixed. I just paid to have the house appraised and I am $25,000 upside down on this house. I have two year before I MUST get the home refinanced, or I get into this fluctuation interest rate situation. I am not sure what to do! I have thoughts of selling the house, but I owe more than it is worth. My hubby said he wants to stop paying on it and let it get foreclosed on. I just don't know what else to try. Any suggestions? Please.

6 Answers

  • 1 decade ago
    Best Answer

    Since you have another 2 years before you have to do anything at all I would sit tight, this should all have corrected itself by then.

  • paul
    Lv 7
    1 decade ago

    Another term for your situation is your house is underwater. You owe more than it is worth. So first you must decide if something about the house or its location is worth paying $25,000 more than it is worth. A refinance is likely not going to be done at any more than 90% of its value and more likely 80% for a fixed 30 year loan. So can you come up with the $25,000 and the 20% cash needed to refinance. The bank/mortgage company may or may not allow a second. You could borrow from a relative and not tell them but that would be fraud.

    1. Give Obama a chance. So far congress has bailed out banks and big business. But there is talk that the bailout should have been homeowners all along.

    2. If a bank foreclose on your property they are likely to get less than the 80% of value in a foreclosure sale. So some banks may be willing to lower the mortgage without the cash up front. That is something you need to negotiate but could be included in an Obama bailout of homeowners.

    At this point we can only hope that congress and Obama have more consideration for the people than the big corporations.

  • 1 decade ago

    You may want to check with some local Mortgage Professionals as the Government is coming out with loan programs to help people in your situation.

    If you do not go the refinance route, instead of stopping payments and letting the bank foreclose, you would be better off doing a Short Sale. This is a process where your Lender agrees to accept less than what is owed so you can sell it. The benefit to the Lender is that they will not have to foreclose and incur additional costs, so many Lenders are willing to work with you on a Short Sale because of where the market has gone.

    The benefit to you is that your credit will be somewhat spared. Your credit scores will drop when you do a Short Sale, but no where near as much as if you are foreclosed on. Much better option.

  • Jay P
    Lv 7
    1 decade ago

    Absolutely do not allow the house to be foreclosed on. That is a terrible option. Firstly, you could be reposnsible for the difference in values, but it will also destroy your credit and hopes for getting future loans.

    Your best bet is to wait. I know reates are very low right now, but you have some more time before your rates reset. Home values may rebound and you may be able to get a loan that suits you better.

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  • godged
    Lv 7
    1 decade ago

    Don't make another stupid decision on top of your first one. The foreclosure will devastate your credit, you will not be buying another house for a bare minimum of 2 years, probably more like 5. Since your credit will be trashed, this will effect your ability to purchase anything effected by credit score, car, insurance, credit cards, rentals, etc.. Many employers also consider your credit score when making job offers.

    One option, ask your current lender for a loan modification into a fixed rate. Since interest rates are way down, get going on this soon.

    Source(s): Oregon Realtor
  • harms
    Lv 4
    3 years ago

    on each and every occasion thinking a refinance you should look heavily on the linked fee of the residing house as against the loan stability. some factors interior the country have suffered a severe devalualtion interior the marketplace fee of the residing house. Have a Realtor pull comps on your area to make certain what the present marketplace fee is. Then contact a respected loan broking service to purchase prices. inspite of you make certain do not borrow better than 80% of the linked fee of your want that cushion to allow for marketplace united statesand downs. sturdy good fortune!

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