Original question: I have equity in my owner-occupied home even with the decline of property values. My home is located in Seattle. I owe $190k plus several back payments of some $70k. I am able to pay the mortgage if I can refinance at today's mortgage rates instead of the 6 percent rate I am under now (fixed-rate loan). Is there any hope for me other than selling my house via a short sale? I want to keep it and continue to live there.
A: The late payments make it unlikely that you can refinance. You have probably done sufficient damage to your credit score that, even if you could refinance, the interest rate you might be offered would be little better than what you are paying today.
You might instead talk to your servicer about a loan modification. If you are eligible for HAMP, your monthly payment can be lowered though a series of actions to get it to a point where it is not more than 31 percent of your monthly gross (pre-tax) income. This may provide you the affordability you need in order to retain your home.
If you are not eligible for HAMP, your servicer may make a proprietary modification available to you.
This would require direct negotiation with your servicer, who will act on behalf of the loan's owner to try to mitigate actual or potential loss. If available, you may get some relief relative to where you are at the moment, but these kinds of deals are highly individualized to try to produce the best outcome for both the loan's owner and you.
You mention "short sale." A short sale is where the mortgage lender agrees that the home can be sold for less than the value of the mortgage on the property. Unless you have no equity at all, you should not need to conduct a short sale to get out of your property if that is what you want to do.
- HSH.com’s annual outlook: 2019 Mortgage and Housing Market Forecasts
At the start of each year, HSH.com details the important factors we think are most likely to influence the mortgage and real estate markets in the coming year. Come each July, we review to see if our expectations are being met or not.
- What is a rate and term refinance?
Homeowners have a variety of reasons for refinancing and each reason can indicate that one refinance option or another makes the most sense.
- Are ten-year fixed-rate mortgages (FRM) available anywhere?
Sure! Virtually all lenders who sell product to Fannie Mae or Freddie Mac will be able to offer you mortgage with a 10-year term. However, interest rates are usually the same as the lender's 15-year offerings.
- What is HARP and do I qualify for a HARP loan?
Thousands of homeowners are still eligible to refinance under HARP. Are you one of them? Time is running out!
- How quickly can you refinance after a bankruptcy?
We have received a lot of questions over the years regarding how quickly you can refinance a mortgage following bankruptcy.