We are a family of four people (two parents, two children aged 12 and 
and we live in Flint. We have lived in our house 1100 square meters for 13 years. We need a bigger house and we had to get out of our ever-rising ARM mortgage. We are in a bad mortgage company with whom we refinanced a few years ago to pay off debt.
Now property values in our city fell. We do not borrow more than the value of the house, but if we could sell our house, we could only break even. We have barely enough to meet the needs of, and certainly can not save anything. We asked our mortgage co. if they can reduce the rate and to determine, but they said they could not do anything about it until we left behind in our payments.
We must be behind them so that you help us? We also have other debts, we should be paid, but not able to take us out of house-payment-control. The house needs a roof, the windows, plumbing and bathroom repairs, we obviously can not afford. We’re sinking! What should we do?
Not a good time to sell. A lot of people I know tried to sell their homes end up in shortsale/foreclosure. If you can’t afford the payments, what about moving out and put some tenants in your property? I would just leave the stuff that needs to be fixed unless necessary or leave that upto management company. Meanwhile it would be good idea to move into a cheaper apartment for a while until market comes back to norm. I know you’ll probably have negative cashflow but at least you’ll get to save your house, and of course your future equity.
I would definitely NOT suggest you fall behind on your mortgage on purpose.
You can try to refinance into a lower fixed rate on your current mortgage. It really depends on if you have any equity left and how bad your current rate has adjusted to. If that doesn’t help then it’s time to look at selling your home.
If you do have to go that route keep in mind you may have to rent for a few years to save up money for a downpayment. Especially in a declining market it’s probably not a good idea to get into another 100% loan. They’re very difficult to get out of if you need.
DO NOT fall behind on your payments at all. . . doing so will jack up your credit, and it will be a downfall, and will take a while for you to rebuild your credit. This will also make it harder for you to refinance, or purchase a new home. . . with the housing market the way it is, and lenders tightening policies, you really need a good FICO to get a decent rate. . . .
First thing I would do is find out the value of your home. . . you can get a free comp check from a lot of mortgage companies/appraisal companies. . . this will give a more accurate figure of what your home value is. . . from here you can decide if it would be more benefical for you to refi or sell your home.
Keep in mind, that if you sell your home and decide to buy a new one, you are most likely going to need a downpayment for your new home. . . . Days of 0% financing are almost completely gone. . . . I work as a loan officier, and had deals die overnight because very few lenders want to do 100% financing. . .
Rates right now are not that bad, and you can always go refi into a 3-10 year interest only arm. . . I don’t think a 30 year fixed rate mortgage would help you out in your current situation, only because your payments increase.
DO NOT FALL BEHIND ON YOUR MORTGAGE!!!!! Doing so will only ensure you of having much higher than average interest rates on future home loans. Sell the home and move somewhere else. Obtain a 100% LTV fixed rate mortgage. You will need only average credit to do this (FICO score of 620). The new purchase will be contingent upon selling your current home. You may not walk away with a lot of cash but, if all other facets of your credit profile are ok, you’ll get a better home with a fixed payment.
Fixing up a home in a declining values area seems like a waste of money to me. Time to move on to a better home – and a better mortgage.
Your best option may be to go ahead and take the loss with selling. You can try and find something livable and finance 100% of the new home. Have you asked your mortgage company about refinancing? Rates are still really good and perhaps you can get a lower rate with a refinance. Most lenders won’t modify the rate just becasue you need them to. They will require a full blown refi. If that isn’t an option, then maybe it’s best to break even and sell the home. Start over fresh somewhere else and work hard to pay off the other debt.
If your credit allows for it. . . apply for a 0% percent credit card to transfer some outstanding debt to. That way every bit you are sending is going to the principal. It can take a while to accomoplish, but with discipline it can be paid off.
Feel free to respond with any questions at lisa. brozenic@banklibertykc. com. I’d be happy to help if I can.
If you can’t afford where you are now, how do you think you’re going to afford something bigger, better and in a nicer neighborhood?
Tell your mortgage company you’re going to file for bankruptcy if they don’t help. Chances are, there’s something they can do to help you – they’re just trying to protect their profit.
If that doesn’t work, sell the house and RENT.
This is what I am seeing in your post:
1) You say you can’t afford to live where you are and are barely making ends meet now.
2) You say you want to upgrade to a bigger place.
So MY question is:
If you can’t afford where you live now, how are you going to afford something bigger?
The problem isn’t your mortgage. . you used it to pay off bills which is ALWAYS a mistake. . you don’t save anything, all you do is stretch out the payments, and in the end, you end up paying dearly.
You need to refinance to a fixed rate until the market picks back up so you can put more down on a bigger place, when you can afford it.
Right now, you CANNOT afford a new home.