My husband and I bought a house with a 3/1 arm mortgage. Our payment will soon adjust starting Dec. of 2007 . The problem is we cannot afford to pay an additional $ 500.00 to our monthly mortgage. They say that if we call our lender, they might be able to help us . The thing is I don't know if i should call them or not. Do you have any idea on how they will be able help us. Any options?
2007-11-25 01:26:56 · 7 answers · asked by Tess F 2 in Business & Finance ➔ Renting & Real Estate
They may be willing to alter the terms rather than foreclose.
Of course, you had no problem with the terms when they favored you...so maybe they'll just say "you're stuck with the deal as is."
2007-11-25 01:29:28 · answer #1 · answered by Anonymous · 0⤊ 1⤋
Loan modification isn't a magical wand to make it all better.
You owe a certain number of dollars. Interest rates are higher now than they were then.
Your lender will not modify the loan to some interest rate that is not compatible with current market rates. Loan modification is something to use when you have a loan, but cannot refinance for some reason. You're not going to get a 4.5% interest rate out of it, like I had three years ago for 3/1s. You should be able to get something in the sixes.
By all means try. But be careful; I've heard tales of certain bank employees who put people into negative amortization loans under the guise of loan modification, and be prepared in case the best they're willing to do doesn't help.
If that fails, you have four options:
1) Refinance
2) find the extra money somehow (you're going to have to do this for at least one month, to make December's payment on time)
3) Sell
4) Have the property foreclosed.
Never choose a loan based upon payment. Yes, you need to be able to make the payment, but the cost of the money (interest rate and upfront costs for the loan) are far more important.
2007-11-25 09:49:12 · answer #2 · answered by Searchlight Crusade 5 · 0⤊ 0⤋
Nope, they aren't going to help you and I'll tell you why.
When you took out an adjustable rate mortgage instead of a fixed rate mortage, that was a CHOICE.
You were gambling on the fact that the rates would be stable or decline, and they didn't. Just because your gambling didn't pay off, doesn't mean the lender is now going to bail you out because that isn't fair to other borrowers that DIDN'T gamble and DO PAY.
My advice, if you cannot refinance to a fixed rate, is to put the house on the market and sell it before you fall into foreclosure and your credit rating gets destroyed.
Next time, unless you are going to be in the home for less than 7 years, if you can't afford to buy the home on a fixed rate mortgage, then you CAN'T AFFORD the home at all.
2007-11-25 09:43:42 · answer #3 · answered by Expert8675309 7 · 0⤊ 0⤋
Depending on which lender you have, they may be able to adjust your payment, rather than go through a foreclosure. A few lenders are also working with folks in your situation to convert these mortgages into long term fixed rate mortgages.
The real question to be asked is "Why on earth did you sign for a mortgage with a payment scheduled to increase that much after three years ?" Did you expect manna from heaven when the interest rate changed ?
2007-11-25 10:00:28 · answer #4 · answered by acermill 7 · 0⤊ 0⤋
If you have good credit you can refinance. shop around. You dont have to use the same bank. Get a fixed loan. Preferably a 15 yr.
2007-11-25 12:09:50 · answer #5 · answered by heybulldog 5 · 0⤊ 0⤋
shop around very quickly for a new loan at the best possible
rate, possibly a fixed rate. time is of the essence, act
immediately so you don,t loose your house. good luck.
2007-11-25 09:30:37 · answer #6 · answered by Jerry S 7 · 0⤊ 0⤋
My freind is a broker, they can refianance the loan and put it on a fixed rate,
2007-11-25 09:30:39 · answer #7 · answered by spiritwalker 6 · 1⤊ 1⤋