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what to do after mortgage modification?

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what to do after mortgage modification?  Reply with quote  


I could use some advice as to the best route to take in my current financial situation.

I am 30, not married nor kids and make a decent salary. I would appreciate any advice offered as to best manage my finances in order to accumulate as much wealth as quickly as possible....

Here are the details:

After several years, I have just recently completed a foreclosure mediation and modification. Part of the modification is essentially an interest free 'loan' of 27000 which acts as a lien on my condo and comes due when either I sell, I complete all payments, or I am delinquent again (not going to happen). I currently owe 97000 on my property which is worth between 130000-140000. 30 years left @4.25% interest + taxes & insurance, my monthly payment is about $650 +$150 HOA for a total of $800 towards my housing per month.

65000/yr salary= ~4000/month takehome
4000 in debt not counting home
4000 in 401k
4000 in taxable investment
15000 in cash
~2000 Monthly spending including housing

While I'm guessing the first recommendation will be to get rid of the 4k consumer debt, what should I do after that?

Should I then work to pay off the condo even though there is an interest free balloon payment that would be coming due?

My current thought is to pay the bare minimum on the condo, max out retirement accounts and put the rest into taxable investment accounts. With 30 years left on the loan, my thought is that inflation will grind away at both the fixed payment as well as the interest free loan essentially making them negligible in the long run while the money I'm investing will grow exponentially.

Thanks for any thoughts!
Post Sun Nov 09, 2014 5:32 pm
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The first thing I would do is save up the $27K. The last thing I'd want to happen is to finish paying off the main, then have the balloon payment foreclose. After that, the credit cards, and then the rest. Investing I would do last.

Oldguy will support your suggested action, though. He believes leveraged investment is a good thing, and when it is, it's great. When it's not, you're bankrupt, but that only happens to poor people like Donald Trump.
Post Sun Nov 09, 2014 6:21 pm
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Oldguy will support your suggested action, though.

Well, almost. Once I had 4 houses and 6 mortgages on them. One mortgage had a balloon. My plan was to simply refi the balloon somewhere else when it came due in a few yrs. During those few years, interest rates shot up to 15%, most lenders would not lend - and even if they did, who wants to be stuck with a 15% loan that had an anti-prepay clause? And I didn't want to sell one of the houses - prices had plummeted due to high mortgage rates, I would have had to take a big loss. So I sold our 3/4 truck and our overhead camper - that, plus our savings, was just enough to pay off the balloon. Then I bought a new truck and 100% financed it - you couldn't get real estate loans but car loans were still available. That was 30 years ago - and it was my last balloon. I use only 30 yr, fully amortized, fixed rate loans - no designer loans, no VAR loans. I borrow seed money to invest in the stock market - I need my money supply to be completely risk free - that way my entire risk is confined to the investments. (Imagine how screwed I would be if I used 'balloon' money to buy a stock and then the balloon popped and forced me to sell at a big loss?)
Post Sun Nov 09, 2014 6:45 pm
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A mortgage is the security that lenders hold in support of a loan for the purchase of real estate. A mortgage lien is a form of conditional ownership of your property claimed by your home loan provider.

Project Finance
Post Tue Mar 17, 2015 12:15 pm
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