Hi I have a really dumb question for all of you. We currently have 2 mortgages 1st and 2nd the 1st on is adjustable rate mortages. The one loan already adjusted and we modified it again for another 2 years because it went up $600 and we couldn't afford that. So here is my problem, I lost my job last month and my income was cut in half (I do get unemployement) but it doesn't seem to be enough at the end of the month. I am afraid we will loose our home.
Currently our 2nd mortgage has an interest rate of 11% and our 1st has 6%. I am seeking advice on where to start to get this into a fixed mortgage. I know ideally we should try to get a 15 year loan, but I am not sure if that is affordable for us right now.
Any advice from people who have gone through this or who have the knowledge would be greatly appreciated!! Thanks in advance.
Try getting a 30 yr. loan with the lowest interest rate that you qualifty for, to get the mo. payments as low as possible. Have the mortgage representative also calculate what a mo. payment would be IF you took out a 15 mo. mortgage. Whenever you can, make the 15 yr. mo. payment, but if you can't you won't be locked into the higher payment.
If you live in Minneapolis, call your neighborhood association. A lot of them have groups or contacts for people with mortgage issues. If you live in another city, call your city hall. I'd think the receptionist or information person would also have suggestions. Otherwise, just go in to your bank and see what a banker says. They could at least give you estimates on what their interest rates and stuff are currently.
look into consolidating the two if you can.
E.,
The Bush bailout isn't doing what it is publicized to do. We've been told that if they bail out the banks from the toxic mortgages, the banks in turn must help home owners in trouble.
I don't want to paint a difficult picture, but I want you to have the knowledge going forward.
Mortgage companies have gone back to strict lending standards from 20+ years ago. You may be able to find a lender that is a little lax, but it's going to be hard.
This is the typical criteria: your combined mortgage should be 80% of the value of the home, you will need to prove that 28% of your gross income covers your principle interest taxes and insurance. Know that a 15 year mortgage will have higher payments.
The good news, if you qualify, mortgage rates have never been lower!
Going back to the legislation of the bailout plan, there is talk about judges in bankruptcy being able to force loan modifications. I don't know where that stands as of late last week.
I hope this is a start.
Best of luck!!
John Cavallone
Hi E. - I am so sorry to hear about your situation. I don't have any big ideas, other than to talk to your bank or a mortgage lender about putting your 1st and 2nd into one fixed rate mortgage now, while the rates are so low. I don't know how much equity you have in your home, or how much other debt you have, but if you have a lot of high interest debt, like credit cards, you may want to roll that into your new mortgage as well.
If you have a financial planner, or banker, I would talk to them. I am sure they are talking to a lot of people in a similar situation to yours these days.
Be strong during this difficult time, but get support where you need it. Ask lots of questions so you can make informed decisions, and know that this difficult time will eventually pass and you well end up smarter and stonger on the other side.
Good Luck.
We were in a similar situation, with a first and second and just refinanced. With the job loss it might be a little tougher but I would roll your first and second into one 30 yr fixed and you should be able to find rates below 6% right now. Just have them roll closing costs into your mortgage. One other issue you might run into though is your loan to value. We had to bring some money to closing because our home value dropped and they are only giving mortgages if you have 95% loan to value or better. Good luck! We really hadn't felt the economy crunch until we decided to refinance and found it is definitely more complicated than it used to be to get a loan.
Becky's correct in that you won't be able to walk into a bank and qualify for a new mortgage, but there are other options. I would start by calling your lender, especially before you get too far behind as they are able to help more the earlier you get in touch. They'll ask you for a breakdown of your current income/debt/monthly expenses and will make suggestions to get your account current. I was able to do a loan modification where they forgave 2 payments and just added them on to the end of the loan. Since you have an ARM, they'll probably be willing to reduce your interest rate for a while.
If your lender isn't able to do enough to help - don't give up. That's when I would contact City Hall where you live and ask what programs your city has to help.
Best of luck!
E.,,
To start with, there is a program called Hope for Homeowners. It is a government program for people who are struggling to pay their mortgage. I do not know much about it, but if you goole Hope for Homeowners, the site will come up.
Also, have you looked into refinancing so you can just have one, fixed mortgage? Rates are good now, we are currently refinancing for 5%.... maybe lower even. We were at 7% Companies can give you a quote without you committing to anything, and they can roll the closing costs into the monthly payments, which still should be less than what you're paying now.
Good luck!
