I have a 2 year arm. they told me to refinance after that for a lower monthly payment. my payments are 2900/mo
Answer:
Sounds like you bought a house you can't afford. You left out your income. It all depends on that.
If you can't afford it, you should think about getting out. Losing it to a foreclosure due to missing paymeents is far worse.
If you refuse to sell and if you have car payments, get rid of those cars. Replace them with CHEAP used ones.
Update:
Well, if you can ride it out until his work is steady, it should be OK, but you have to work on building up an emergency cash fund immediately.
It's usually a good idea to shoot for home payments of around 25% of monthly income. You're around 40%. And, you're right if one of you gets sick or loses a job, you'd be in trouble. The cash fund could hold you if you had to sell your house.
Update:
"I would try a 30 year interest only fixed mortgage"
INTEREST ONLY IS CRAP CRAP CRAP. Don't be fooled by these shark mortgage brokers. You end up paying a HUGE amount of interest. If you love making your mortgage broker RICH, go for it. However, for the rest of us, always stick with a standard 20% down mortgage.
Just think what will happen when the ARM ends in 2 years.
Housing prices have stopped increasing. Make the best of it as long as both you and your husband work. Save up some money as another poster commented. You may need to downsize at some point only if there are buyers - which may not be for years at this rate. Good luck and hang in there.
Well just having gotten the house 2 months ago probably means that there isn't enough equity in the home currently to refinance just because you did a 100% financing option. I would save what money you can at this point. Find out if you have what is called a prepayment penalty, basically if you sell or refinance your home you have to pay X amount (usually calculated in terms of # of months of interest.) Also most likely you're not going to be able to do anything for at least 6mo and depending on the lenders, some don't look at a house's new appraisal value until a year seasoning. If things get really tough and you want to try and keep the house above all else, like the other poster mentioned, get rid of other things that are taking money out of your pocket each month.
Joe Hermann
joeh@1stcolumbiamtg.com
Well, i assume the reason for your 80/20 loan in the first place was bad credit-- so how do you expect to refi somewhere else for a better rate?
Check your paperwork and make sure you dont have a prepayment penalty-- if you had that bad of interst, i'm betting that you have a prepayment penalty, in which case refying would screw you over.
The closing costs of refinancing will cost you about 2% of the
loan amount and you don't have enough equity to re-finance now
anyway. Try to cut other household expenses and earn
additional income. For ideas on how to do that try this Site:
http://www.realmoneyideas.com Go to the following pages:
"Cutting Expenses" "Additional Income" & Money Saving Ideas".
Lots of great info and Ideas are on those pages.
Obviously, you got in WAY over your head as so many people do today. You young ones seem to feel that you have to HAVE EVERYTHING right away, and then get stuck with house payments you can't possibly make. Sell the house and look for something more within your means.
You need to hit me back, I can assist you with all your questions. I am in the mortgage industry and have 3.5 year in the business. I work for a well establish company. Hope to hear from you. My service is FREE.
Thanks,
Jon
citronge@yahoo.com
I would try a 30 year interest only fixed mortgage if you can get into it.
They are the best mortgage on the market by far. Just so you know I have seen a lot of people with your problem.
Matt
http://www.diversifiedlender.com/.
Look at your Mortgage Note, and Look at your Riders that you received at the closing. Look to see if you have a pre-payment pentality. This could be anywhere from 2-4 percent of the loan amount. Say your have one at 3 percent = that would cost you 12,900 to get out of your mortgage, plus closing cost again. Talk to your Lender, see if they can do something. But what ever you do - please do not be late on the mortgage - That is the first thing a lender will look at, if you can not make the payment now, than they will think you would not be able to make the new payment.
:et's say that your new mortage would be 449,000 - that would pay off the mtg, pre-payment pentality and closing cost - this is just an estimate, and it is estimated high - ok
Your new payment would be 2987.22 based on a 7 percent rate. Your rate could be higher or lower depends on your credit score - ok. You could do a option arm - what that is 4 payment plan -where you have a choice of a payment. From a 30 yr fix, 15 yr fix, interest only, and a parcial payment . You decide each month the payment to send in. This is workable for ppl who are self-employed and money is tight during certain months.
Talk with a broker, a broker underwrites for many company's (I underwrite for 150 companies) so I only have to pull credit 1 time, and they look at my credit. A single lender (not a broker) has programs available, but they may not be able to help you and your situation, so you go elsewhere, and than that person pulls your credit (see what I mean.) If you shop, your credit is pulled and that is considered a soft pull, for a 30 day period. Just like shopping for a auto, it is good for 30 days. If you apply for a credit card, that is considered a "hard" pull and it drags down your credit score. When looking for a home, please do not apply for a credit card, Department Charge Card, Gasoline Card or make any major purchases, like a auto, etc. This will pull your credit down.
Good luck to you.
I don't think selling is an option- the market is not moving quickly now, and depending on where you are, it could sit for a while, and between the amount you have to pay the realtors, pre-payment penalties, etc. you're not likely to come out well.
Refinancing is out- you got no equity. If you can find a good deal, take it, but look VERY closely at your current contract as well as the new one. You could be loosing a lot of legal protections when you refinance your home. Refinancing could make you personally liable on the debt, so they could take your home and sue you, too.
My major suggestion is to really do a severe financial diet. Audit your expenses over the past three months and account for every dime (this is easy to do if you bank online). Find out where your money is going, then budget accordingly. Pay down other liabilities to buy yourself flexibility in your budget. In robust months, pay as much as you can to interest-earning liabilities. In lean months, you will be able to pay lower minimums. Use cash as much as possible, but budget it in. For example, my husband and I withdraw $500 every payday for food and gas, put it into an envelope, and each of us has to sign out every bill we take and return the change. We also each get an allowance, which is our ONLY unrestricted cash. We don't acquire new liabilities at all. And since our allowance is our unrestricted cash, we're not allowed to use the household cards to buy things spur of the moment. Our "household" pays for a set list of things each month, and anything outside of it we pay for ourselves. It might sound rough, but it has made us retain more of our wealth.
Your realtor agent wasn't nice. He or she found a house too big for you guys. Because the mortgage payment is over 50% of your salaries combined.
Chances are, both realtors and loan agents talked you guys into it.
And your loan agent is also bad, telling you that you can refinance for lower monthly payment after 2 years. He or she can NOT predict future and it is irresponsible to make such assumption. We are lucky that, today's rates, even though went up some in past 2 years, are actually very low compare to past 40 years.
I am surprised you didn't get fix-rate mortgage. Because national average is only 6.43%. Even after fee, you would pay about 7%.
http://money.cnn.com/2006/09/14/real_est.
It would have been responsible if you bought something smaller. But, now you have this house, and as housing market slumps, you can't unload it with a profit (unless it appreciate more than 6% to pay the sells commission).
It is crucial for both of you to work harder and save. May be a second job? Before 2 years is up, it is important to save so you can pay into houses equity to refinance.
Good luck!
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