What's your effective interest rate. (loan, real estate, recourse, financing)

[horseplayer]

Scenario I

You bought a 200K home, with 100% financing, at 6% APR. Your P&I would be 1199.10 per month. Now your home is worth 100K. What interest rate would have made your payment that high on a 100K loan? 14.18%

Should I leave the keys on the table, and buy the house down the street, in my cousin's name, for 100K? What if I took that 1199.10 per month and made payments? With a loan of 100K (6% APR), if you paid 1110.21 per month for 10 years--it would be paid for. Not only would you save 89.11 per month (many refi for less savings), your payments would end 20 years sooner! Jingle mail, jingle mail.......

Scenario II

You bought a 300K home, with 100% financing, at 6%APR. Your P&I would be 1798.65 per month. Now your home is worth 100K. What interest rate would have made your payment that high on a 100K loan? 21.55%

Should I leave the keys on the table, and buy the house down the street, in my cousin's name, for 100K? What if I took that 1798.65 per month and made payments? With a loan of 100K (6% APR), if you paid 1460.86 per month for 7 years--it would be paid for. You would also save 337.79 per month, and your payments would end 23 years sooner.

[AndrewSoss]

What if your house was paid off in 7 years, but the first 5 years was spent in prison for mortgage fraud? Is it worth it?

[dcdubbs]

AndrewSoss is right - purchasing a house in your cousins name is whats known as using a straw buyer- and it is illegal. You saw a lot of that during the run up in prices a few yrs ago.
You could always have your cousin purchase the property as an investment, add you to the deed, and have a contract with him stipulating you keep the equity. That is legal

The other option is modifying your mortgage- eventually renting your property out-until the market recovers and buying another property. The next house you buy assuming you are going to live in it- can be financed as an owner occupied property.

To see if you meet the criteria to receive a loan modification check here:
Am I Eligible for a Loan Modification?

[chet everett]

First, I enjoy a day at the racetrack as much as anybody. The one nearest me is a gem, with gorgeous facilities, top notch treatment of the guests no matter how little they pay / bet and some terrific racing. When I go I enjoy the amenities but have no illusions that I have any real chance of winning a big pot of dough -- the people that own the track get rich off people LEAVING THEIR money... Entries | Arlington Park

If you think there is any similarity between owning real estate, either for personal use or investment property, and horse racing you are WAY OFF...

To start -- it is pretty much ALWAYS a highly risky path to attempt 100% financing. Any one who did so basically should have had a giant warning label stuck to their head for a month or so so that the whole world could have told what sorts of REALLY BAD THINGS could happen to them.
If one is crazed enough to do so AND so unsophisticated to purchase in an area with the selling prices were so pumped up that they have now fallen by a HALF or to a THIRD of the original price this is A GIANT RED FLAG that the original buyer is NOT a skilled "picker of horse flesh" -- they should STAY THE HECK AWAY from real estate for A LONG TIME...

ANY ONE contemplating "leaving the keys of the table" really ought to be darned sure that a) the lender has NO RECOURSE to bring civil suit for the DEBT and b) better be even more sure that they had every last i dotted and t crossed should the lender really be angry and seek criminal charges. I have personal knowledge of SEVERAL lenders now pursuing a whole host of criminal charges against people from everything ranging to fraud to money laundering and racketeering. These are BIG DEALS and people are going to face serious consequences...