Question by jr: Does this sound as bad as I think it does ? Mortgage modification.?
Here are the quick facts : 1 the house is worth more than it will sell for because our neighborhood has deteriorated drastically. I will lose money. The house will sell for 20,000 less than the loan should I try that route. 2) the modification is a temporary lower interest rate to 6.8 for only 5 years. Then it shoots to 10.8 % for 23 more years. 3) I am in chapter 13 bankruptcy and cannot qualify for any refinancing through any other companies because my credit score it drastically shot. Im in the 400′s so no one try to identity theft me, your wasting your own time. 3) the mortgage company will lower the rate to (see Number 2) in addition to I pay them 800 dollars up front and then I pay into the loan another 3000 in attorney fees.
I went over the numbers and can’t see how this is all that good as they make it seem. Any opinions?
I know what the 13 is for, and currently I can afford my regular payments and im not behind on neither the 13 or the Mortgage. The 13 was due to medical debts, not from purchasing the house and not being able to afford it. I had no health insurance and ended up with serious medical issues. Thanks for all the comments.
Best answer:
Answer by Ryan M
Modifications are mostly only to help you for the short term. They are not designed to help you out due to overpaying for a house or making a bad decision to buy during an obvious housing bubble. Chapter 13 will do nothing for you in regards to your house. I am really interest to know your CURRENT interest rate, if the modification is going to “lower” it to 6.8%. I have not even heard of a loan above 5.5% in quite a few years. The current market value of your house is irrelevant. No one should be EVER helped based on an UNREALIZED loss. The key question is “Can you afford your CURRENT payments?” If you can, just keep paying as you agreed to the lender. If you cannot, THEN look at the short sale route. A modification is pointless if you cannot afford the house now AND in 5 years with the higher rate. All you will do is delay the eventual outcome.
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Have you asked your lender if they will agree to a short sale? A short sale with say a $25000 haircut would allow you to sell the house at market rate & probably just walk away with no further damage to you financially. Keep your $3800 for mtge payments if they agree to a short sale because you do not want to fall behind on your payments.
A house is never “worth more than it will sell for.” By definition, it is only worth what it will NOW sell for. 6.8% and 10.8% interest rates are far above current market rates. What you don’t state is what rate you’re paying now and whether any principal forgiveness is part of this deal. If the lender will agree to a short sale, I would do that instead.
that mod will not help you at all. The 13 is designed to get you current in the end. What happens if the homes go up in the near future and when the 13 is done you could sell and break even? Have you thought about that at all? Prices will come back and yes even your credit score by the time the 13 is done you may well be able to refinance with an FHA secured note at that time with perfect pay history to the trustee.
I am a mortgage banker in TN