Question
The best solution to dealing with mortgage that lost $value?
Before I met my husband, I bought a tiny condo (20K downpayment) where I lived for a while. After getting married in 2007, we moved to his rental apartment (bigger than mine). A friend of mine, who was about to finish her college degree, decided to rent the condo from me for a year. My husband lease was to expire in November 2008. We figured a year down the road, we'd sell my condo, get the money out and buy a house for our family. Than September 2008 happened. My condo lost 50K value. No bank will re-finance unless I put the 50K down (not an option). The condo is rented until year end but I put $500 each month out of pocket. I also lost job in the summer. I keep hearing about people who just let the bank take over the debt (how? is it bancrupcy?) or all kinds of government programs our government has to deal with mortgages, but no one seems to know what the best solution would be. I have not missed a payment yet, but I am not sure how long I can be going like that. Any ideas of how to deal with this mess?
1 month ago - 3 answers
Best Answer
Chosen by Asker
You are not residing in the condo, therefore is it not your primary residence. Most mortgage companies will modify your mortgage in order for you not to be on the street. You should call your mortgage company at any rate. Find out if they have a program that will allow you #1 to reduce your monthly payment and or interest rate. #2 accept the current value of the property and reduce your loan amount to this level. #3 any other program that will assist you and cause you to keep your condo. You must inform them of your current financial situation. Most of these options will not cause a negative on your credit report. The other options are not as good,but are available to you #1 Offer your mortgage company a deed-in-lieu of foreclosure. ( you would be giving your property to the bank/lender thus relieving you of any financial responsibility)(This will cause a negative on your credit report for 5-7 years.) #2 Request a short sale on the condo (The bank/lender would allow this even if it means the condo will not sell for more than the current mortgage loan) (This will cause a negative on your credit report for 5-7 years.) #3 Stop making your monthly payments to the lender/bank and allow the condo to go into foreclosure(This will cause a negative on your credit report for 5-7 years.) If you plan to be on the mortgage loan application with your husband you had better make plans to do this before the situation of your condo turn negative. It might be that your husband might have to acquire the new home you guys are planning to purchase on his own. That is applying for a mortgage loan using his credit score, credit debts. The reason for this is even with your current good credit and no missed mortgage payments on your condo, your mortgage payment might put you and your husband in a bad ratio situation (Check with your mortgage broker/banker as to which is the best possible solution to your situation) I hope this has been of some benefit to you, good luck. "FIGHT ON"
1 month ago
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Other Answers
You're kind of stuck. Since the condo is rental property and not your main home, you aren't eligible for the special assistance programs. You could just let it be foreclosed on, which means you quit paying and the lender takes it over. But that will do really bad things to your credit and you wouldn't likely be able to buy a house for several years, maybe as much as seven.
by Judy- 1 month ago
Dorothy - We are all in the same boat. Can you move back into your place and try to hang on until the economy improves? With the condo being income property and you not having a job, you will not be able to refinance it. There are no government programs to help people who own essentially investment property. You can walk away and ruin your credit, try to find a tenant willing to pay more, move back into it and let it be your home for awhile. Impossible situation? No, but no different than the rest of the country is experiencing.
by dog ma- 1 month ago