Unique situation - any ideas?

goddess52 · #1 (**permalink**) 08-25-2010, 12:03 PM

Hello,

New to the forum here and any ideas anyone may have would be of great help!

Like (almost) everyone else, we are underwater with our mortgage. Honestly, it wasn't even a concern to look at our home value and where we were on that scale until recent circumstances with my husband's health. Up to that point, we were looking to sell the home when my husband retired in about 6 years. Because of his health, there is a very strong possibility that he will have to stop working and go on disability in the near future. .

With his current income, we are able to make the mortgage payments comfortably. We have a record of paying our mortgage on time and continue to do so. We've been in the home for 24 years and refinanced several years ago before the market fell.

With my husband's health issues, upkeep of the home is difficult. It's an older home and always seems to need something done which he can no longer do. Extra cash flow now goes to medical bills.

We truly need to sell the home and move to a condo/apartment that is maintenance free OR it have lower mortgage payments to assist with the medical bills and have that in place when he has the decreased (disability) income.

I've researched all of the current government programs and we don't fit any of the qualifications for help. I researched the FHA Short Refinance program coming out next month and found out that we meet those qualifications, but our lender (BOA) will not be participating in that program! I've read that our lender is reluctant to do any type of renogiating.

Home is currently valued at: 96,500
Mortgage is 111,000 (we had quite a bit of equity in the home when we refinanced a few years back and used some of it to pay off debt)
Mortage is FHA.

We live in Central Florida. Home is in an older neighborhood with foreclosures surrounding us.

Trying to be proactive and make adjustments, but it seems we are stuck.

Please chime in with any ideas you may have.

Thank you!

GarySpicuzza · #2 (**permalink**) 08-27-2010, 04:23 PM

Well, there's not much you can do being upside down with your loan to value ratio.

If you have one or two extra bedrooms you could consider renting one or both of those rooms out to bring in extra money. My son's house payment is $635 per month but he rents out the other bedroom for $400 per month.

That would bring in some extra income.

Most people in your situation are just walking away from the homes. They stop paying their mortgage payment and bank the money for a year until the forclosure legal paperwork is completed. Not the best option cause it will hurt your credit rating for a while.

It's too bad you refinanced your equity out a few years ago...your home was probably almost paid for. A paid off home is a very valuable asset.

If your house payment is say $750 per month the monetary value of having a house paid off and not having to make that payment is the equivilent of having $180,000 in the bank @ 5% interested per anum.

lighthouse · #3 (**permalink**) 09-07-2010, 12:12 PM

You must talk with your lender/bank and let them know your situation! Your house is not worth 50K to the bank if you foreclose. So they may be interested in helping you out or letting you live there for a year or so without making payments. But you will never know unless you talk to them.

Not making payments for a year would allow to stock up cash or payoff some other bills. That when it is time to move you will have a deposit and a few months rent (maybe even years rent) This will hurt your credit but you may need to get over that because your well being is much more important.

Lighthouse

DavidBeairsto · #4 (**permalink**) 09-08-2010, 12:12 AM

the first idea that comes to mind is preparing to replace that income despite disability... in the event that you have a shortfall the bank will likely look on your hardship circumstances differently if you were anticipating a way to supplement your income despite the disability... how many people do that?

BankAim · #5 (**permalink**) 09-10-2010, 03:34 PM

goddess52 sorry to hear about the situation you are in. (by the way I'm new here too.)

My sister and her husband are in a very similar situation. They are attempting to short sell their home, but if they cannot sell it foreclosure is what they are facing.

They too refinanced before the market went splat and are upside down. (which is pretty close to the norm these days.)

Sounds like to me you are not going to be able to get out of your home without some damage to your credit. Attempt to limit that damage so you can recover faster.

Every time your situation changes contact your lender to see if you fit any of the 'help' programs.

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