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This country is a mess...I bought a modest home 5 years ago, well within my means. I owe 145,000 on my loan and my home is now worth 105,000. I am current on my loan and have never been late. I recently took a 4% percent pay cut, and silly me, thought I might be able to take advantage of the current low interest rates to refinance my loan at a lower rate. I have no problem paying the total principal owed but needed the reduction of interset to offset my paycut. I can't get refinanced! Because I am too upside down. So I guess my options will be to walk away, and let them foreclose.
A 4% paycut caused you to not be able to afford the house? 4% isn't that much. If you truly bought within your means a 4% pay cut would not make you unable to afford your mortgage.
If your making 100K it works out to 76 dollars a week, just cut your cable, and coupon like crazy and look to reduce your electricity/utilities, and it should be ok, I'd hate to see you walk out on your mortgage. things can really change from year to year, this is not a decision to take lightly
Loan modifications are a joke... just like the homebuyer's tax credit, their only purpose was to try and "stabilize" things to fool the masses. The statistics around how many modified loans aren't performing within months is staggering.
Moderator cut: Off topic
Last edited by Green Irish Eyes; 07-17-2010 at 10:41 AM..
I have been working on a loan modification with my bank for over a year. I am still making my payments the call them suspense payments. I keep asking when I will be done and get my new contract they keep sending me notices that I will soon recieve them. Every other month the send someone to inspect my house . I also live in phoenix . I think its all a scam they are not going to do anything cause I am still making my payments
"I know 6 people" is anecdotal evidence and not evidence.
It's like the person who never wears their seatbelt because they
"know" of someone who survived a car crash by being safely
thrown clear of a crashing automobile.
Statistics on the rate of mods vs. applications show that it is
unlikely that a person will get one. A person paying all their
bills and current on their mortgage is even less likely to get one.
I have been working on a loan modification with my bank for over a year. I am still making my payments the call them suspense payments. I keep asking when I will be done and get my new contract they keep sending me notices that I will soon recieve them. Every other month the send someone to inspect my house . I also live in phoenix . I think its all a scam they are not going to do anything cause I am still making my payments
It does take awhile but a year seems a bit long. I think it depends on the bank but Wells Fargo handled mine extremely well and I have no complaints. They are somewhat overwhelmed by the number of cases they're dealing with and I believe there's a delay as batch them in a package to send to the investors for a decision. I didn't miss any payments (except the ones they told me not to make) and ended up with close to the same payment when the deal was finalized as the trial mod amount. It was several hundred less than my original and brought it to 31% of my gross monthly income with no reduction in principal but instead a 50% cut in the interest rate. Just keep making your payments and they'll probably come through for you unless there's a major change to your situation.
As I mentioned in an earlier thread, a close friend of mine here in Phoenix received the permanent modification under the HMA program last year. Her husband's company went under, they depleted their savings, and they weren't able to keep up the mortgage payments. Her lender is Wells-Fargo.
They had a 30-year fixed. Mortgage payment is now 31% of their gross monthly income. WF extended it to 40 years with first 5 years at 2%, sixth year 3%, then 4%, and year eight on at 4.75%, where it stays fixed. I asked her this week the details and she said they were on the trial payments for 5 months before getting the permanent modification. They contacted the bank immediately after their first missed payment. Worked out great for them as they have three young children and now they can stay in their home.
A relative is in the process and said, however, that if you're able to afford and stay current on your payments and just looking for a "deal" or making up for your house being underwater, it's harder to modify. The priority is on those who have a hardship and missed payments/facing imminent foreclosure. She mentioned this site has been helpful with stories of people in the modification process:
If you bought well within your means then a 4% paycut should NOT hurt you on your mortgage payment.
Refinancing can be more hurtful - even at a lower interest rate.. i checked into it myself and after talking in depth with them about it I would be be "behind the game" then if I stuck with my current interest rate.. right now I'm "ahead of the game" as far as my mortgage goes.
They get you with the - well, if you refinance we can save you x dollars per month... which is true... but really... look at the numbers closer... (your home is worth x dollars and refinancing ADDS to your total principal already and you already owe x dollars.....- the adding to the principal is usually the fees associated with a refinance)..
Cut your cable bill or get a second job first until things improve. you'll come out ahead. - in most cases.
If you bought well within your means then a 4% paycut should NOT hurt you on your mortgage payment.
Refinancing can be more hurtful - even at a lower interest rate.. i checked into it myself and after talking in depth with them about it I would be be "behind the game" then if I stuck with my current interest rate.. right now I'm "ahead of the game" as far as my mortgage goes.
They get you with the - well, if you refinance we can save you x dollars per month... which is true... but really... look at the numbers closer... (your home is worth x dollars and refinancing ADDS to your total principal already and you already owe x dollars.....- the adding to the principal is usually the fees associated with a refinance)..
Cut your cable bill or get a second job first until things improve. you'll come out ahead. - in most cases.
There aren't any additional amounts added to your principal under the Obama Making Home Affordable program. They just adjust the rate down and add the payments you don't have to make to the remaining balance. In that way it's quite a bit better than a refi.
Barely underwater - investments are a gamble, get over it & be grateful you have a home
4% pay cut & now you can't afford the home you financed, supposedly well within your means 5 years ago??? I think not. Let's put this in real terms. Since you say "well within my means," lets assume you were earning $50K/year. That means your pay cut is only $2K. So because of a reduction of $2K over the course of a year, you now cannot afford your home. The pay cut is less than $200/month. Unless you suddenly decided to live beyond your means & run up a ton of consumer debt, you should have no problems affording your mortgage due to a pay cut of only 4%.
Not to mention I'm sure you had some salary increases since you purchased 5 years ago. If not & after 5 years you're now taking a pay cut, I suggest you not only find a part time job but consider finding a better line of work. Even if you had only a sad 1% cost of living adjustment each year, that brings you up from $50K to $52,550.50. Now a pay cut of 4% takes you down to $50,448.48. Brings me back to the first point...time to redefine "well within my means."
quote=6bones9;15056957]This country is a mess...I bought a modest home 5 years ago, well within my means. I owe 145,000 on my loan and my home is now worth 105,000. I am current on my loan and have never been late. I recently took a 4% percent pay cut, and silly me, thought I might be able to take advantage of the current low interest rates to refinance my loan at a lower rate. I have no problem paying the total principal owed but needed the reduction of interset to offset my paycut. I can't get refinanced! Because I am too upside down. So I guess my options will be to walk away, and let them foreclose.[/quote]
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Barely underwater - investments are a gamble, get over it & be grateful you have a home
Let's put this in real terms. Since you say "well within my means," lets assume you were earning $50K/year. That means your pay cut is only $2K. So because of a reduction of $2K over the course of a year, you now cannot afford your home. The pay cut is less than $200/month. Unless you suddenly decided to live beyond your means & run up a ton of consumer debt, you should have no problems affording your mortgage due to a pay cut of only 4%.
