I cannot pay my mort pymt, which went up by $300. Is it a good idea to foreclose, I have no other options.?

Question

My new pymt will be over $1500.00. My credit is not too good to refi, I've tried that and the deals are no better than what I have now. With the new pymt, my husband and I will only have $300.00 per month to live off of. We still have to grocery shop, gas up our cars and take care of our children. This appears to be the only option. I bought the house before I got married and have refinanced several times. I now owe too much to sell in our area. If I foreclose will it go on his credit? I don't know what else to do.

Answer 1

Two working adults make $1,800 a month?

That's $225 a week each. One or both of you needs to get out there and make some money.

Your house is too expensive for your income, but foreclosure really isn't an option here. You will still owe money and your credit will be ruined. Besides, you really don't want to throw away a place you have invested do much in.

You are living beyond your means.

No one ever likes to be told they are living beyond their means, especially here on Yahoo. Denying reality seems to be a popular pasttime for a lot of people around here, and its thumbs down after thumbs down for those who dare to say something.

You need to make some major lifestyle changes no matter how unpleasant it may seem. You may feel you deserve or even need two cars, but if all you each earn is $225 a week, you can't afford it and thats all there is to it. Same thing with cable and every other non-essential thing you have.

You need to cut expenses to the bare bones and make do with what you have until one or both of you starts bringing home enough for you to afford the payments. If you need to work nights and weekends, then thats what you have to do.

Answer 2

Danita,
your situation is one that will be plaguing many more across America...I'm sorry. With that said, there may be hope. If your scores are low, you have made your mortgage payments on time, and have decent equity in the home, you may qualify for a my community refinance. This option would allow for a fixed rate no pre-pay and possible interest only payment. (see other post with regards to interest only)

You stated that you have tried other deals, were these subprime options? Many loan officers are 1 dimensional. They look to place credit challenged individuals with sub-prime lenders only. The positive is now there are additional alternatives available. Ask your loan officer to D/U you. Fannie Mae has made some notable changes in the last two months that may work for your situation.

Another, may be to negotiate with your lender and ask to have the adjustment deferred. Again, in light of all the bad publicity going on with adjustable rates and foreclosures, this may be an option your lender is willing to accept. The downside is that you are only delaying the inevitable.

One more note..if the house is not worth what you owe...get-out! Also, if he refinanced with you than yes, it will go his credit. Is he the major bread-winner? Does he owe more than you, and if so, how is his credit?

After-thought: Do not listen to all the post about how you're living outside your means ect. You fate probably had nothing to do with living outside your means. You like many others were placed in ARMS w/o proper education as to the risk you would likely incur. An added payment of 300.00 in mortgage payments is huge. Roughly 90% of all ARM programs sold were not accurately explained to the borrower. There will be roughly 1.7 trillion in ARMS adjusting here in the near future and the so many will be in the same situation as you. This is so much of a problem that Congress is stepping in...Now that does not sound like a person living beyond their means to me...

Answer 3

Whoa, okay. Let's slow down. Your first option is to continue the payment. Not going to work for you, AND it WILL go up every 6 months for 2 or 3 years. BUT you don't have to forclose just yet either.

Your second option in your opinion is to let the house be forclosed upon. That will stay with you for 7 years, and you may be institutionally unlendable afterwards for a long time. Let's find an alternate route.

You don't think you can refinance. Okay, there are three items you want to look first. Your credit, your financial capacity to repay, and the collatoral (how muchthe home is worth vs how much is owed on it). Credit; whats your credit? If it is 680+, you should still be in a decent situation. If your husbands is better, go with his. Anything above 680 won't matter though if you are using a non-conforming lender. Sounds like you might have to.

So you make 1800/month? Is that between the two of you, or just yours? If that's the case, we may need to look at other options. 1800/month is subsistance living for a family, and you should not own a home if that's the case. There are plenty of jobs that pay better, have you looked around? 1800/month just seems to small, I am wondering if this is just your income alone. If it was only half, it would make more sense.

How much do you owe on the home. Go to http://www.zillow.com or http://www.realestateabc.com to get an idea on how much your home is worth. Lookup how much you owe on it, and figure out if you have any leeway. You should want 20K of leeway to refinance. At least.

Sounds like you already refinanced into an adjustable rate mortgage before. Usually homeowners will do this to fix their credit so they can get a fixed product on better terms. BUT YOU MUST FIX YOUR CREDIT! You can always look into credit repair as part of the solution. Don't give out hope just yet on refinancing and getting on a plan to fix your financial situation. go to http://www.newprimehomeloans.com and they will give you a free analysis if you call them.

The last option I would want to look at before selling is to rent out the home for the cost of the mtg. On your income you should be renting anyway, and if you let someone else eat the payments for you, you should be fine, but this takes time. Do you have financial reserves?

If you sell the house at a loss, you will pay capital gains tax on what you couldn't recoup. If you are forclosed upon, the bank will sell it for much less, and will report the difference between what it sold for, and how much you still owed them to the IRS. This will be taxed as gross income.

If your husband is on the mortgage with you, it will go on his credit also. If he isn't it won't matter. Even if he is on title it won't go against him if he isn't on the mortgage.

Answer 4

Best thing to do is get rid of the house. If you allow the bank to foreclose on your home your credit will be ruined for the next several years. Yes you may have to move your family into an apartment or something, however doing nothing will only break your heart AND get you screwed.

Best of luck.

ps. Also if they foreclose you can still end up owing lots of money on the house, as they will put it up for auction.

Answer 5

You havn't mentioned how much you or your husband work. I work 7 days a week to pay my mortgage. I have also worked night jobs from time to time at a movie theatre, a mall, and a restaraunt. I also worked nights at Fed Ex. $300 isnt much for 2 people to earn in a month. 2 paper routes might even suffice. I will tell you this if you are sitting on the couch and watching CABLE TV and you are having trouble paying your mortgage, you need to make nessessary changes. Also turn your heat down 2 degrees, lower the temp on your water heater, change to lower watt light bulbs and eat affordable food at home.

Answer 6

Don't allow foreclosure. You can probably refinance with a fixed rate mortgage like American Equity or one of those -- many people are finding the variable rates are killing them financially just like you seem to be. You have some equity so it is feasible to refi. It is possible that his credit will be entangled with your bad credit if you allow foreclosure -- but he can dispute it.