It looks like we've made a very bad financial decision and signed a loan with a huge pre-payment penalty. We've only been in our home six months and we cannot afford the payments - we over spent. We're going to have a hard time selling the home only six months after the original purchase, at a price that will cover the huge penalty we'll owe.
Any suggestions?
2007-01-25 11:51:48 · 6 answers · asked by Nina W 1 in Business & Finance ➔ Renting & Real Estate
Sad when Loan Officer's dont educate there clients. You need to find out what type of prepayment penalty you have?
Is it Soft? Is it Hard? Yes there is a difference.
Soft Prepayment Penalty: You cannot refinance without taking a penalty from your Lender BUT you can SELL the house without taking a prepayment penalty from your Lender.
Hard Prepayment Penalty: You cannot SELL or Refinance without taking a Penalty from your Lender.
Neg Am Loan are not good in today's Market! No matter how someone explains it to you unless you are an investor and looking very short term.
Also once you purchase a home there is no rescission period because it's not a refinance. You make the decision that day at that time at Title whether you accept the Interest rate and purchase price or you dont.
So look through that big binder that the Title Company gave you at Signing and see if you have a Prepayment Penalty.
If you have anymore questions please contact me advice is always free.
2007-01-25 14:15:08 · answer #1 · answered by Openthathouse.com 4 · 1⤊ 0⤋
Don't just take the word of your loan officer on this. I'm sure that he/she is great at what he/she does, but find out for yourself. The prepayment clause will be in the Promissory Note (sometime just called the Note). The Note contains all the terms of your loan, including prepayment penalty, if there is one. If you can't find it in your Note, then often there will be an addendum (an add-on) behind the Note that contains the pre-payment penalty, so make sure you check everything in the Note, including any addendum that is there. If you aren't planning on paying off the loan before 10 years however, you should be fine. Generally speaking, a prepayment penalty would only apply to VERY large amounts of money paid in advance, e.g. 20% of the loan paid in advance in a given year. Again, this info will be found in your Note. If you're just making an extra payment every month, you'll probably experience no blowback of any kind from your lender. That's been my experience. Like I said, just find out for yourself by reading the Note before you sign all of your paperwork at settlement. Good luck to you!
2016-05-24 00:04:15 · answer #2 · answered by ? 4 · 0⤊ 0⤋
I'm very sorry to hear about you not being able to afford the payments. Life happens........
There may be a Realtor that will work with you, while you market your home for sale; procuring your own buyer, that will charge you to simply ensure your contractual obligations are met with the sale and ensure the escrow process is completed satisfactorily vs. charging you to conduct a full listing of the property and its advertising & marketing.
Is there any way you can rent the property to cover your mortgage; until the pre-payment period is over.
As inconvenient as this may be - have you thought of renting rooms to derive money to assist with the payment? Students, singles, newly divorced are often times seeking temporary situations for rentals.
Contact the lender and discuss the situation with them. You won't be the first or last person this has happened to.
You will most likely still be paying the pre-payment penalty but they will work with you.
Assess what the values are in your area and have comparables to assist you in pricing your home to yield enough - hopefully to cover your expenses with selling. You'll have transfer taxes, escrow fees and closing costs, etc. that you need to consider as well.
I sincerely wish for a promising outcome for you.
2007-01-25 12:54:23 · answer #3 · answered by ☼High☼Voltage☼Blonde☼ 4 · 1⤊ 0⤋
There are three scenarios.
1) Contact the lender and request the pre-payment penalty be waived due to hardship/fraud by the mortgage broker.
2) Contact the lender and request a short sale or deed in lieu of foreclosure.
3) Allow the property to go into foreclosure (bad idea).
* You can also be creative such as rent out a room or get a second job.
2007-01-25 12:07:20 · answer #4 · answered by horace60 2 · 1⤊ 1⤋
I suspect you will have to pay the pre-payment penalty. Perhaps the advise with a real estate attorney may go a long way in assisting you for your best options. Good luck
2007-01-25 12:05:37 · answer #5 · answered by Jimmy 5 · 1⤊ 0⤋
Call the lender immediately and discuss your situation. They have dealt with this before and will have good suggestions.
2007-01-25 12:00:15 · answer #6 · answered by CJKatl 4 · 2⤊ 0⤋