U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
 [Register]
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 02-08-2009, 12:38 AM
 
2 posts, read 4,908 times
Reputation: 10

Advertisements

My wife and I bought a home in Dec 2004 for $680,000 in Brentwood, Northern California that is now worth $450,000. We purchased with no money down. The 1st mortgage is a 5/1 LIBOR Int Only ARM for $544,799 at 5.75%, the 2nd is a FRHEL w/15 Yr ballon for $128,021.82 at 7.125%. The payments are $2610 and $918 respectively. We have no issue making the current payments and my wife and I both have FICOs above 800, but we are scared because the 1st mortgage will adjust at the end of the year to God knows what monthly payments.

I'm curious as to what our refinance options are since we have no equity in the home. Is it possible to refi and have the lender write off the difference between the old purchase price and current market value (probably not but have to ask)? We would gladly put down 20% if that is the case. Has anyone been able to do this? What do lenders typically do in this case? Would really appreciate hearing from others who are in our situation and have successfully refinanced.

Thanks,
Curious in Cali
Reply With Quote Quick reply to this message

 
Old 02-08-2009, 07:14 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,095,994 times
Reputation: 1007
i would call the lender to do a loan modification
Reply With Quote Quick reply to this message
 
Old 02-08-2009, 07:48 AM
 
3,576 posts, read 5,904,462 times
Reputation: 1431
Quote:
Originally Posted by renriq02 View Post
i would call the lender to do a loan modification
I'm not sure the lender would even do a loan modification in this case.

The problem with loan mods is that the people need to show signs of distress. The original poster has paid every month on time and still is sitting on loads of cash. Lenders want to see how poor you are. If the OP is still sitting on 100K cash, they would want the OP to apply that 100K in cash to the principal before even considering a loan modification.

The OP needs to pay for his own appraisal. (It will cost between $300-500 in most cases). Brentwood is in the East Bay and I believe the conforming loan limits in that area is about 625k this year.

Depending on what the appraisal comes back, the OP than needs to consider his/her options.

If the appraisal comes back at 500K, than they need to consider whether to come up with at least 180K cash downpayment most lenders will want.

I highly doubt lenders will do a "cram down" on the mortgage....even if the OP is in bankruptcy.

To the OP, I would not be too concerned with the ARM readjustment right now. The Libor rate is currently is around 2%. I doubt think this rate is going up anytime soon. You ARMs adjusts to this rate (plus addition points or whatever the terms of your mortgage is).

This is not going to be a lecture why not to get an interest only, no downpayment jumbo loan. But I ask you, what did you down with the "extra" money you were saving? Because you mentioned you have quite a sizable amount of cash still left.

So get that appraisal and than go to the banks to see what can be done. If you can still handle the house notes, than its up to you whether you can tolerate monthly increases (if not approved for a loan modification) or just walk away and ruin your credit.
Reply With Quote Quick reply to this message
 
Old 02-08-2009, 08:00 AM
 
Location: Charlotte, North Carolina
5,137 posts, read 15,095,994 times
Reputation: 1007
there are loans that lenders have been modding due to the house being upside down



Quote:
Originally Posted by aneftp View Post
I'm not sure the lender would even do a loan modification in this case.

The problem with loan mods is that the people need to show signs of distress. The original poster has paid every month on time and still is sitting on loads of cash. Lenders want to see how poor you are. If the OP is still sitting on 100K cash, they would want the OP to apply that 100K in cash to the principal before even considering a loan modification.

The OP needs to pay for his own appraisal. (It will cost between $300-500 in most cases). Brentwood is in the East Bay and I believe the conforming loan limits in that area is about 625k this year.

Depending on what the appraisal comes back, the OP than needs to consider his/her options.

If the appraisal comes back at 500K, than they need to consider whether to come up with at least 180K cash downpayment most lenders will want.

I highly doubt lenders will do a "cram down" on the mortgage....even if the OP is in bankruptcy.

To the OP, I would not be too concerned with the ARM readjustment right now. The Libor rate is currently is around 2%. I doubt think this rate is going up anytime soon. You ARMs adjusts to this rate (plus addition points or whatever the terms of your mortgage is).

This is not going to be a lecture why not to get an interest only, no downpayment jumbo loan. But I ask you, what did you down with the "extra" money you were saving? Because you mentioned you have quite a sizable amount of cash still left.

So get that appraisal and than go to the banks to see what can be done. If you can still handle the house notes, than its up to you whether you can tolerate monthly increases (if not approved for a loan modification) or just walk away and ruin your credit.
Reply With Quote Quick reply to this message
 
Old 02-08-2009, 10:34 AM
 
Location: central, between Pepe's Tacos and Roberto's
2,086 posts, read 6,098,079 times
Reputation: 952
Quote:
Originally Posted by rkarun View Post
My wife and I bought a home in Dec 2004 for $680,000 in Brentwood, Northern California that is now worth $450,000. We purchased with no money down. The 1st mortgage is a 5/1 LIBOR Int Only ARM for $544,799 at 5.75%, the 2nd is a FRHEL w/15 Yr ballon for $128,021.82 at 7.125%. The payments are $2610 and $918 respectively. We have no issue making the current payments and my wife and I both have FICOs above 800, but we are scared because the 1st mortgage will adjust at the end of the year to God knows what monthly payments.

I'm curious as to what our refinance options are since we have no equity in the home. Is it possible to refi and have the lender write off the difference between the old purchase price and current market value (probably not but have to ask)? We would gladly put down 20% if that is the case. Has anyone been able to do this? What do lenders typically do in this case? Would really appreciate hearing from others who are in our situation and have successfully refinanced.

Thanks,
Curious in Cali
I have heard of short payoff refinances being done but do not have any first hand experience or proof that lenders are accepting short payoffs on refinances. Other than that your options for refinance are basically none. As was said before a modification may be an option, be diligent when choosing a company to go with. Apparently sheisters have invaded that line of work.

The good news is that based on the current 1 year LIBOR rate (1.98%), plus your likely margin which is 2.25% most times, your fully indexed rate were your loan to adjust today would be 4.23%. I don't see London Interbank raising their rates anytime soon.
Reply With Quote Quick reply to this message
 
Old 02-13-2009, 07:27 PM
 
2 posts, read 4,908 times
Reputation: 10
Thanks for all the replies guys. To answer a question about why we did not put any money down, well at the time my wife and I had little to no money to put down. The money we have now is what we have accumulated in the last 4 years -- we have worked hard and saved a lot

Well we will approach Citimortgage later in the year and see what they have to say in the way of a loan modification.
Reply With Quote Quick reply to this message
 
Old 02-14-2009, 11:02 AM
 
Location: Great State of Texas
86,093 posts, read 69,893,919 times
Reputation: 27519
Quote:
Originally Posted by rkarun View Post
Thanks for all the replies guys. To answer a question about why we did not put any money down, well at the time my wife and I had little to no money to put down. The money we have now is what we have accumulated in the last 4 years -- we have worked hard and saved a lot

Well we will approach Citimortgage later in the year and see what they have to say in the way of a loan modification.
You should approach them now and not later in the year. If they don't go for a loan modification/refinance then you will need to explore other options.
Reply With Quote Quick reply to this message
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.

Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate > Mortgages
Similar Threads
Follow City-Data.com founder on our Forum or

All times are GMT -6.

2005-2018, Advameg, Inc.

City-Data.com - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35 - Top