Now my wife and I are in the hole about 400 bucks per month. The loan will go up again in another 6 months. I cannot refi because someone in the neighborhood went into foreclosure and sold for about 100k less than what I paid for the property. How can I get out of this mess, lock the loan rate so it doesnt go up again etc…what is the solution?
I purchased an “investment” property 2 years ago. I get consistant rent but the mortgage went adjustable.
20
Mar
mscarriem
March 20, 2010 at 9:42 pm
I would suggest you contact the lender that currently holds the paper on it and ask them for what is called a rate and term refinance. explain the new rate is putting you in the hole. the may not care that the last sale is 100K less. what they will care about is holding the paper. It is by far your best bet. Also, you could try a refi and see if an appraiser can not use the foreclosure in its comps.
Cheryl G
March 20, 2010 at 10:38 pm
The only way to change the loan terms is to refinance. You could increase the rent at the end of the lease term. If the tenant is on a month-to-month, 30 days’ notice is required. By the way, a foreclosure is not necessarily the best indicator of value in the neighborhood. Ask a real estate agent to give you an analysis of values in the area and help you determine a reasonable list price. It could solve the problem and it doesn’t hurt to ask.
If the house you live in is increasing in value, you might consider an equity loan that would buy down the mortgage on the investment property, but this would be a last resort. Check with an agent first.
nystom
March 20, 2010 at 11:12 pm
An important thing to note is your taxes. Make sure that you are depreciating the rental. You depreciate the house (not the land) over 27.5 years. As long as your wife and you make less than $150,000, you can take the loss, both the real loss and the depreciation. You are allowed to deduct all the expenses (car, fees, mortgage interest, etc.). This will not make you whole, but should get you some of the money back.
But talk to your bank. They do not want to repossess. They will lose more money if they repossess than if you continue to pay.
Carolinahomerates.com
March 20, 2010 at 11:22 pm
you need to find another lender…..there must’ve been more than 1 foreclosure for your value to go down.
appraisers may exclude that foreclosure….especially if it’s only 1
TPJ
March 20, 2010 at 11:58 pm
Just follow the plan you made out for yourself 2 years ago on this “investment”.
Were you not aware that the interest rate would adjust and make plans for that back then?
engineer50
March 21, 2010 at 12:02 am
If you can’t refi, you’re at the mercy of the current lender. The mortgage didn’t just “go adjustable” by itself, you bought it that way!
kylekd4
March 21, 2010 at 12:16 am
It is true that you can’t change the terms without refinancing but what you need to ask for is a streamline refinance- it may not even require an appraisal- They just verify your employment. And if your house truly is worth 100k less than what you bought it for you may want to look into other options for the house to make you more money like converting it into a multi family home.