How to get out out of a expensive mortgage?
by Mortgage Rates on Saturday, September 18th, 2010 | 6 Comments
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If she is behind in payments she can talk to the bank. They won’t deal if the payments are current. They have no reason to. If it is sold for less than the mortgage then the difference has to be paid – or defaulted. Other than selling it and paying the difference all other options have a significant negative effect on credit rating.
Not really.
If the debt is so crushing that financial collapse is imminent bankruptcy may be the only solution.
If the mortgage is just “too expensive”, but not ruinous, depending on your market it may be best to ride it out. In CA for example there is definately a period of decline, but it won’t last forever, and assuming you didn’t pay too much to begin with it will work itself out.
Nope, hope that the market goes up again.
Most of you the answers you currently have are correct. Your X has options, some more palatable than others. First if she isn’t behind, maybe a second job or some assistance on your part for a period of time, until the market turns around. I would do almost anything to keep my home. Fight for it.
If she is behind, contact the loan company to see if they will work with her. They are up against the wall on this issue as well. And while they may not be able to refinance her loan, they can and should restructure it, even if it means adding what she owes on to the rear of the mortgage, otherwise extending the mortgage to say a 40 year loan.
If the loan company will not work with her, she could give them “deed in lieu of foreclosure”. It will impact her credit history, but not like a foreclosure would.
My last word is; Help her fight to keep it.
This is a classic scenario. Someone convinced her that “re-financing” her debt would somehow make it more manageable. They also told her that she could afford more of a house than she really can.
She has gotten herself into a real mess. There is no pretty answer.
She has a few options: a) increase her income.
b) decrease her other expenses.
c) find a stupid buyer (because a smart one wouldn’t pay enough for the house.)
d) await immenient bankruptcy.
e) Sell the house at an “unreasonable” price, and work for the next ten years to pay the remainder. THE MORTGAGES ALL MUST BE PAID OFF AT CLOSING, and she’d have to get a personal loan to do so–it is that loan that she’ll be paying on for the next ten years or so.
f) allow someone else to assume the loan(s.)
g) get a renter (which is really the same as option (a) above.)
h) start selling other assets.
i) she can default on the loan(s).
She overspent. She has managed her money poorly. She’s in over her head. There isn’t an easy answer. All will be painful.
The website below, Provident Living, has suggestions–and on-line lessons–for helping anyone to get in control of their finances, because there isn’t an easy solution. She needs to re-adjust her whole life style, or she’ll just get in worse and worse shape (which is what happened when you two first re-financed the house. You started a downward spiral at that time, you just didn’t realize it.) If she hasn’t taken suggestions from you in the past though, she’s unlikely to do so in the future.
Just be glad this isn’t your problem! But I sure feel that those who have advised her all along have robbed her of her dignity, and her money. Poor girl!
so your saying she would owe more to the bank if she sold the property. shes caught in a classic case of paying more than what something is worth. well she has several options, 1 is to find a bigger fool. another choice is bankruptcy, or squeeze by and have her live under her means for 30 years. another 1 is to make more money. another is to foreclosure, kinda messes up her credit, another is to have a foreclosure expert investor make a deal with the bank so her credit isnt messed up. another is to extend her mortgage to a 40 year loan which isnt going to do anything since interest rates are not going to drop but rise higher so equity builds even slower. another is to go to church and pray real hard, you know ask god to give her the lucky lotto numbers, or some money to drop from heaven like 200k. well i would question your motives if you are doing this as a friend or looking to put that foot back into a possible marriage.