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Loan Modification?

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phillygirl
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Loan Modification?  Reply with quote  

My husband recently lost his job and although his is receiving unemployment benefits, we are unable to continue to make the hefty mortgage payments. Like everyone else, we have many other bills to pay like gas/electric, water, credit cards, car payments. We owe more than the house is worth and are trying to avoid a short sale/foreclosure. From speaking with a representative at the bank, I'm now under the impression we will not qualify since we recently purchased a car (we had to, lease was up) and have some credit card useage. Obviously we use our credit cards in order to pay for things we can't afford when the mortgage is due so I don't quite understand that reasoning at all. We won't find out for another 20 days regardless and my payment is past due already...first time we're late. Anyway, is this the way to go? Do I continue to struggle to feed my kids at the expense of the mortgage or just stop paying it and risk foreclosure? I'm just so lost and don't know how to either get out of this house, or get out of the payments. Any help is greatly appreciated.
Post Fri Aug 09, 2013 2:42 pm
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oldguy
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quote:
Like everyone else, we have many other bills - -
since we recently purchased a car (we had to, lease was up) - -
Obviously we use our credit cards in order to pay for things we can't afford


You're living under the illusion that 'everyone' lives beyond their means - you can thank the Media for that. The stories that make the News are the "tear jerkers", the sensational stories, ie, the stories that sell newspapers. In reality, about 3% of mortgages are in default, the other 97% of the people are doing OK.

1. First, I would start with the job issue, don't make the mistake of hanging on UE hunting for 6 months or more for the perfect job - take any job, retail, drive a truck, anything. A 6-month 'lay-out' is toxic in the HR world, ie, if you haven't worked for 6-months your skills are ol and no one wants you. Did you both work - do you still have one paycheck coming in?

2. Fix the car issue - leasing is financially inefficient, it's the most expensive way to use a car - glad you got that stopped. Did you buy the lease car? Or a new car? In either case, you need to end up with a good reliable used car, about 5 to 7 years old, with only 75K to 100k miles on it - something that will last for another 100,000 miles and can be easily paid off. (Have you noticed that most millionaires drive older cars? There is a reason for that. I have a 2001).

3. Mortgage - how big is the loan & what is the rate? Apply for one of the new Obama plans that were presented in last week's speeches - a mortgage 'write-down' plus a lower interest rate, both will save a bunch for you. If your bank isn't interested go to other mortgage companies, it is a competitive business, someone will want your business.
Post Fri Aug 09, 2013 3:12 pm
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coaster
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You didn't mention what your mortgage's interest rate is; would you care to share that? If you can refinance to a lower rate and a new term, it would give you some breathing space. You may qualify under the Federal "HARP" program, where being underwater isn't necessarily a no-go on a refi.

http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx

moved to Credit and Loans forum, double post removed

~Tim~
Post Fri Aug 09, 2013 3:29 pm
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phillygirl
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I wasn't implying that everyone lives beyond their means, but out of the 97% of the people doing ok, they also have to pay for their gas, electric, water, cars, etc. That's what I meant. I live in NJ and I'm pretty sure I just read that approx. 22% were still underwater.

1. My husband is in a specific job field and is currently searching in that field. It wouldn't make sense to take a job that pays less than UE. We wouldn't be able to pay the other bills either. Obviously if it carries on too long or the benefits are exhausted he will get something, anything. This is not the issue I'm inquiring about...

2. We did fix the car issue by financing, not leasing, a 2007 with 40k miles. Although our payment is considerably higher than our lease, I'm hoping it will be worth it in the end to own it.

3. We currently owe $187k at 5% and the house won't list for any higher than $159k. We are in the process of the mortgage loan mod, but like I said, we probably won't qualify.

I will take your advise and shop around. However, I'm not sure I can continue the payments in the meantime. I was hoping to get a trial payment in order prior to having more than one late or non-payment.
Post Fri Aug 09, 2013 3:41 pm
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oldguy
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Good job on the car - modern cars are giving us 200,000 trouble-free miles now so you're set for many years. And yes, owning is far more cost effective than leasing. (People are enticed by low payments are forget to look st total cost)

The mortgage part of your house payment must be about $1005/m, anything that you rent will cost almost as much - so I would approach is from 'staying' rather than 'moving, foreclosure, short sale). As for being $30k underwater - if you stay that's not an issue, it's just a number - and in 5 yrs the $160k house will probably be worth over $200k.

IMO, you're making a mistake on the job issue. It does make sense to take a job that pays less than UE, you avoid that toxic 6-months out of work identifier. When our HR sees a highly specialized ex-worker who only looks to replicate that old job - the HR take-way of that person's work ethic goes way down. Besides all jobs don't pay less. I once drove an 18-wheeler for awhile, it paid way better than min-wage, plus I was often able to get 60 hours per week, it really was a pretty good job - and I was grateful for it. Do you work?
Post Fri Aug 09, 2013 4:17 pm
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phillygirl
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Well if I stay, it is an issue because I can't afford the mortgage. That's what I'm facing and the reason I'm even entertaining the foreclosure/short sale road at all. I'm hoping the loan mod goes through...
Post Fri Aug 09, 2013 4:27 pm
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oldguy
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quote:
Well if I stay, it is an issue because I can't afford the mortgage.


I know - but my point was that a rental house will cost almost as much as your mortgage - so you will still have the 'afford' issue - unless you have relatives or someone who will shelter you for free. (I'm a landlord, I would rent a $160k 3/2 house for about $1300 to $1400/m.)

Are you a one-income family?
Post Fri Aug 09, 2013 5:14 pm
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phillygirl
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No I make a nice living as well, but not enough to pay the mortgage on my own along with the rest. Usually, when my husband is employed, we don't ever qualify for anything that could help us financially because we apaprently make too much money or we're not in enough of a hardship...yet.

Rent for a home in our area that would be suitable for a family of 4 is going to cost us close to $2000, our mortgage is currently $1740 (with taxes, insurance). Originally we thought about renting out our house to get a larger home, but our realtor said we wouldn't be able to get that much. Then upon discussing selling is when we discovered how bad the "underwater" situation really was.
Post Fri Aug 09, 2013 6:26 pm
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oldguy
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quote:
Rent for a home in our area that would be suitable for a family of 4 is going to cost us close to $2000, our mortgage is currently $1740 (with taxes, insurance).


But - but - how does moving out of a $1700/m house and into a $2000/m help your cash flow?? Struggling with your logic here? Very Happy
Post Fri Aug 09, 2013 9:46 pm
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phillygirl
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I was just saying why that situation didn't work for us.
Post Mon Aug 12, 2013 1:27 pm
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norrisgallagher45
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Despite what the government and media have been propagandizing to the public, "..don't pay any firm to do a loan modification...", reputable loan mod firms do get proven results for clients, and for some homeowners it's the best solution. Here are the top 11 tips to avoid getting scammed, and choosing the right one.
Post Tue Aug 20, 2013 9:45 am
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Angelass
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quote:
Originally posted by norrisgallagher45
Despite what the government and media have been propagandizing to the public, "..don't pay any firm to do a loan modification...", reputable loan mod firms do get proven results for clients, and for some homeowners it's the best solution. Here are the top 11 tips to avoid getting scammed, and choosing the right one.


Where are the top 11 tips ???
Post Fri Sep 13, 2013 7:30 am
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