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What to do??


lazy8
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I have gotten myself into a bad situation and am at a loss for which direction I should take.

I purchased my first home 4 years ago and 2 years ago I refinanced to pull some money out to purchase my second home when I was forced to move due to a transfer. I had planned on selling the first home but when it didn't move after awhile I was forced to rent it out for a loss. Fast forward to today and I find myself still with the first home unrented and upside down now on my loan. I have no lates...YET..but am fastly approaching the end of my savings and staring down the possibility of a foreclosure.

I am about 50-100k upside down due to the big decline in the market.

The only options I can see are:

1) foreclosure - how will this affect my current home I live in??

2) Rent it out at a huge loss and run out of cash in 6 months

3) Continue to try to sell the house, asking for a short sale.

I really hate the stress right now of trying to figure out a way to save the situation. I worked for years with the thanks to this site getting my credit score and my bills paid to get a 700 to be able to buy my first home and I went and screwed it up again :(

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lazy8

Suggestion - have you thought about doing interest-only or option arm loans on both properties? That way it is easier keep the property's for your future, while your keeeping the payments low.

Example

Regular loan - $400,000 30yr@6.5%= $2528 (P/I)

Interest Only - $400,000@6.5% /12mths = $2166 (I/O)

MTA OptionArm $400,000 = $1333 (1st yr mthly min pymt)

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They can do an option arm on their primary, and an interest only on their investment. I've done these type of loans, with a good credit score.

On options arms - can go up to 90% LTV.

Since they pulled out money from the first home (which is now investment property) - how are you stating with such certainty that they can do an I/O refinance? They are upside down, you don't know that they can refinance to cover the existing lien. It's just not that simple.

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  • 1 month later...

I am also running into this situation. With the interest only coming to an end -- and the house still on the market and NOT moving I am looking at an increase of $300 on the initial house in July with another increase in Dec. Is it possible to default on the first home and still keep your second home? I've been searching the forums and haven't found an answer yet.

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