Question by Pete: Mortgage refinancing troubles, facing bankruptcy?
I have a first mortgage of 149,000$ Adjustable at 9%
I have a 2nd mortgage of 20,000$ fixed at 9%
The latest appraisal info on my house is an estimated 165,000.
What are my options? My first mortgage is currently 7.5% but it goes up to 9% in 1 month.. No one is willing to finance me because of there is no equity to work with.
Any help would be appreciated, currently I am NOT behind on any payments and I can keep them up for a few months after the adjustable goes up, but after that I will start falling behind.
Mine and my wife’s credit score are both around a 650.
Answer by Tim
Check with the current lender, they might be willing to convert to a fixed rate or even combine the two loans.
Know better? Leave your own answer in the comments!
that’s a tough one…
first I would try to get another appraisal for at least what you owe from another company.
if that fails, buy there are a few companies that will still give you a 103% loan to value which is about where your at once you include closing costs and existing liens… the rate will be high but at least it will keep you out of the adjustable nightmare… (7 to 9 is only the beginning…5-6% life time cap…) so if you can get out..do it.
third if you absolutely have to you’ll end up taking as much money as the bank will give you (normally 100% of your appraised val., again at an above normal rate) and paying the difference out of pocket….3-8k in your case)
the most desperate thing you could do which is highly NOT recommended for too many reasons to list… is to short sell your house back to the bank, called deed in lue of foreclosure, which is essentially giving the house to the bank and they eat the loan then you walk away…the bank has to agree to this as well, but this will get really ugly.
Unfortunately you are one of thousands that are in this trap 100% financed and the housing market crashed, and that crash is not over, prices are dropping big time, and interest rates are rising, expect to see your 9% hit 11-12 in the next year. Part time second job? Other than that sorry to say do not see anything else you can do except bankruptcy
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