Should we Refinance or Sell our home?

Question

Hello my husband and I need help. Two years ago we bought a home for $227,000. We put no money down and financed the whole amount. We have two mortgages and we have something called a 80/20 loan. We have a pre-penalty if we sold our house before May 31, 2007. Between our two mortgage payments we pay around $2,300 a month just for our mortages. My parents help us because we can't afford it. I am not working right now and have just filed for a chaper 7 bankruptcy. So things don't look good. This May we have to make a decision whether to refinance this house or sell and get something smaller. We are unsure what do. We need our mortage payment to be around $1,000 a month to afford. Does anyone know where we could go for help? Should we start with a relator or a new mortgage company? Do we have to wait to May because of our pre-pepenalty? Where do we start? What questions should I ask to a mortage company? Please help. Thank you

Answer 1

Your mortgage payment is wayt above what you can pay for a home, so you should sell the house. You need to know up front though, that by filing for a BK, you have just put yourself into a higher risk category for lenders - which would mean higher interest rates and probably not a 100% loan, right away.

If you filed the BK by yourself (without the husband) that is going to help him to get a mortgage by himself - he is the one working anyways, and you can always be added to the title even if not on the mortgage.

You don't need to necessarily wait until May to sell. Some Prepayment penalties are "hard" and some are "soft". Soft means that if you sell rather than refinance, the penalty may be waived - check your paperwork from the closing. If it is "hard", then waiting until it expires usually is the best option, but you can start selling before May, just not close on the escrow until after the PPP ends in that case.

You should definately start with a mortgage professional, this will give you an idea of how you'll need to structure a new home loan and what exactly you will likely be able to afford. Then, take that info to a Realtor who can assist in both selling your home, and in buying a new one. For the double transaction, you may be able to negotiate a smaller fee for the sale of your home - say 5% rather than 6%, but this would depend on state, specific market, and company that you find.

Best of luck. If you need some general info please feel free to use my website at www.fnmshome.com

Answer 2

Sell it. Start talking to realtors. Make sure they review your prepayment penalty documents. In some cases, they don't apply if you sell, only when you refinance. And they'll work with you on how to time the listing and closing to avoid the penalty, if it does apply.

Since you just filed BK, you won't be able to get any decent financing, on either a refinance or a new purchase.

And if you want a $1000 housing payment, that would get you a house worth no more than $125K. Unlikely in most markets.

There's nothing wrong with renting. The housing market is depressed right now, so you won't miss any huge gains in the next year or two if you don't buy a home today.

Answer 3

Your last hope would be that your husband has great credit. If he does, You may be able to refinance into a low payment loan (interest only, 40yr,50yr) that would allow you to keep the house. It sounds more likely that you are going to have to sell. Get a realtor and put the house on the market. Just close escrow the day after your penalty expires. Try not to let buyers or thier agents know your situation. They will use it against you and low bid your home. As far as they should know, your selling to move to a beter place. Good luck.

Answer 4

Clearly you can't afford it, so you need to sell it and buy a cheaper house. What until about April to put the house on the market and don't close before May 31. You don't need to pay the prepenalty (if your parents can afford to keep helping - you can pay them back some when you sell).

Answer 5

do as the above answers state.
Sell it on may 31or when penalty does apply. you don't need the anchor choking you and husband. it is a house, you can make a home any where.
suggest visit daveramsey.com to learn what bankers pray you never ever learn and apply it. get ' house buying for dummies' for when you are cash secure and debt free.