What should the next step be if new mortgage payments are too high?

Question

This question is regarding my parents. Four years ago they couldnt find their second house for what they could afford about $139K, the lowest they could find was $220K and my husband had to put under his named to get it. Obviously that was not what we all wanted but it happened and soon we had problems. Dad wanted to get that house under his name so after 2 yrs it happened and obviously by so called buying it from him. My husband recommended that he sell the house within the nexy 2 yrs bcuz of the high payments. My dad thought differently he had no plans in doing so. Here we are 2 yrs later, my parents monthly net gross is about $3400. And my dad's loan is now 247K (he consolidated his car loan) and his payments have been $2K and he recently got a notice that the interest rate change and new payments will be of $2700. Its just my parents and two dependents at the house. My dad still does not want to sell. And the house market in chicago right now is horrible.

Even if he sells the house ,where would he be able to buy one that he can afford? My brother-in-law is a police officer and my sister a teacher assistant and they tried to buy a house this summer and couldn't find one that was on their budget and decided to look into moving to Indiana since its so inexpensive. I'm in the process of moving to Georgia. Chicago will always be my hometown but I can't afford living here anymore. My parents resist into moving out of chicago. I hope for the best.

Answer 1

The market is bad all over the place. There are many reasons for this, which include people bought more expenseive homes than they could afford; people got adjustable rate mortgages, without knowing they could make the future payments; people didn't consider what would happen when it was time to refinance if the value of the house was less than they owed. Your folks are not the only ones in this boat. If this sounds snotty, I don't mean it that way.

What's the next step? Maybe they can refinance into a fixed rate loan. Maybe they can sell it for as much as they owe, and just be done with it.

If you can't make the payments, can't refinance or can't sell, you're cooked. There are some government programs being discussed, but I haven't seen any in place yet, and I don't know that they'll apply to 2nd homes (is that what you meant by 2nd house, or did you mean the were ready for a different primary residence?) or investment property.

Answer 2

That's a tricky one. There really aren't many ways to reduce a mortgage payment (actually, there are none that I know of). Would getting a part-time job, either him or your mom, work? At least until the market picks up a bit?

I also don't like variable rate mortgages, especially since the interest rates can change at any time. Yes, you may end up paying a lower rate, but no one can predict how the rates may climb. What if they went up to 10% or more? It has happened here in Alberta once - to 18% actually. The government began helping people make their payments, and some people even walked because they could no longer afford it, even though they had thousands in equity in the home.

My thoughts would be to sell it, even though the market may not be favourable to a seller.

Answer 3

Time for your parents to get an apartment and rent the house until it sells.

You simply can't carry the burden for them. Perhaps they can Refinance... but chances are small in this rotten economy.

I can't believe they put you in theis compromising position. It's not up to your parents if they want to sell or not.. it's up to YOU and your HUSBAND.

I'd like to be driving a new car and live in a big beautiful house too.. but my wallet says NO. You should too!

Answer 4

Sell it

Answer 5

Sorry, your question needs more specifics, if you like, you can message me.