What options do I have when the value of my home has gone down and I need to lower my monthly payments?

Question

Homes in our area have gone down in value and I just recently checked zillow..com and just realized I'm financing a home at 98% of the value of the home. We are in a financial bind right now (new baby, child care costs, etc) and need to do something. The mortgage is too high for us now. I don't have perfect credit. I just called my mortgage company and they said they don't have a program for me. I don't want to sell. Is there a way to lower the monthly payments? If additional information is needed, I'll try to update this question if needed.

I'm at 7.75%. I have a 30 year fixed. So far, there are great answers. Thanks!!!

Answer 1

Well, how long until you can't pay the mortgage any longer? Do you have a three month window, or can you not pay next week?

If you have a little time, you need to start managing your FICO, don't let it manage you. Can you manuver all your dollars owed on your credit card so that all of them have atleast 10% of their maximum balance and no more than 25% of their maximum? Even if you have to put money on your card with the highest interest rate, this can still boost your credit.

You might go to your lender and ask them to reduce your mortgage amount. This is done, though rarely. There are tax repurcussions to this, so beware. If they lower your mortgage by $50k, you'll end up reporting that $50k as income on your taxes, but it's income your never even touched.

What type of loan do you have now? 15 yr fixed? 30? don't tell me you're in a variable ARM...

You might try re-financing with another lender to put yourself in a 40 or 50 fixed. if you're already in a 15 or 30 fixed, your monthly cost will drop. Also, don't be discouraged if the firt few banks turn you down. Try 10, you might have an offer from 1 lender.

Also, don't rely on zillow.com. There are lots of websites that can give approximate amounts. There's nothing like a professionally done appriasal to give you the true market value of your home.

Answer 2

Well...sadly raising your income would be the best answer. If you can't afford your monthly payment at 7.75%, if it was subprime (and it probably was) you can try FHA refinancing which is being allowed through Freddie Mac (assuming you are not in default). Refinancing will not hurt your credit, but getting this will be tough as most of the lenders you probably worked with are not interested (no money for them).

Other options are not about lowering your payments but on reducing your payments in other areas. Such as selling a new car, or other possibilities. Since your mortgage rate appears like it is subprime there is a possibility that you bought too much home.

Some lenders will allow a buy down. This is a legal procedure, and there are companies that work with buy downs who (for a fee) assist you (and maybe you need a real estate lawyer) to make this decision. There are negatives on your credit, and possible tax implications.

But nonetheless, a buy down might work for you if you borrowed to much for your debt to income ratio: What is your DIR?

Finally, homes go down, and homes go up in prices. A home is a shelter, and a place to live. So do your best to find alternatives to reducing your spending first.

Answer 3

At 98% of the homes value (and might have gone down since then) along with the tightening of credit, sorry there is no reputable company right now that will do that. If you take a chance at a fly by night you will lose the house within a year. Second job something else the credit crunch is just beginning. Please do not say you have an ARM that is due to be reset soon.

Answer 4

1. If you want to make comparisons using very accurate data, get quotes from different lenders or brokers on the same day. Mortgage quotes change daily. At times, they even change several times in one day.

2. When you compare terms, compare mortgage quotes for similar lock periods. A lock period is the specific span of time that guarantees implementation of a certain rate. As a rule of thumb, longer lock periods have higher rates. Lock periods are generally offered in increments, like 15, 30, or 60 days.

3. Compare mortgage quotes that have the same points, such as zero or one. In the mortgage business, a point is the term given to a rate. Three points, for example, means three percent. Mortgage quotes follow a tiered pricing. This gives you the opportunity to buy the rate and bring it up or down. How? It's very simple. To make the points decrease, increase the mortgage rate. To make the points increase, reduce the rate.

4. In the quote you ask for, ask that the quote loan be separated from associates fees. Property taxes, home insurance, and pre-paid interest are not lender's fees. What falls under lender's fees are the following: standard title, appraisal fees, and processing or underwriting charges.

5. Compare mortgage quotes of the same type. There are many types of mortgages. There is a buy-to-let mortgage. Then, there are also self-build mortgage, right-to-buy mortgage, and reverse mortgage. The terms of your mortgage could change along with the type.

Things to Watch Out For When Comparing Mortgage Quotes

1. Locks of 45 days or more have a higher rate.

2. If lenders are asking you to pay points on the loan, be sure to have them quote the points in dollars. This is for your protection. Unscrupulous lenders might later on change the base amount to collect more from you. This is because points are computed as percentages. The bigger the base, the higher the commission, for example.

3. Beware of lenders that are not upfront about the loan process to you. A trustworthy mortgage company is always willing to answer your questions and explain points of misunderstanding.

Comparison is good because it highlights the defects of one and showcases the suitability of another. All the websites that dispense mortgage tips will always tell you to compare mortgage quotes.

Answer 5

The value of your home has nothing to do with your mortgage balance...unfortunately, your home could vanish overnight (abducted by aliens?) and you would still owe the same amount.

Unless you are 100% sure your house will increase in value (and soon!), you should probably sell it while it will still raise enough money to pay off what you owe.

Next time, don't listen to the mortgage broker/banker/lender, and instead buy something (with a FIXED rate loan) that will cost you less than 25% of each take-home check.

Answer 6

Unless your credit is perfect, you're not refinancing right now. And if your credit is not perfect, check your existing loan and make sure you don't have a pre-payment penalty.

Assuming you don't, clean your home cleaner than it has ever been before. Window, screens, doors, door knobs, tops of doors, drains, behind the sofa, etc. Fix anything that is not perfect, but is an easy fix. And put the house on the market without a realtor. Pray.

Answer 7

Sorry, a lot of people are in that position right now. Loans are hard to get right now with out good credit when you say not that great what do you mean, your score? I sell Real Estate and the market is so slow because of all the sub prime lenders going out of business, that and the market dropping caused a lot of people to be in a bad position. Have you tried country wide home loans?

Answer 8

Don't rely on a website. I use Zillow myself in my work and from time to time it makes mistakes. Just like us.

I would call a local housing authority or Housing coalition. CCCS provides education and counseling for home buyers in trouble.

Check out HUD.gov and look for a HUD approved counselor in your area.

Answer 9

put 20% down and have the seller pay closing cost and go conforming. Now if you do less then you do know the mip or pmi is a tax deductible item just as interest on the loan

Answer 10

I may be able to help you... I may not. I would need more info, I wouldn't suggest posting it on Yahoo though. You can email me, and I will see what I can do for you.