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I was in that situation last summer, I was in a adjsutable, values were down, but I still had positive equity.
I refied for a 7yr fixed with no negitive amoritization. Its safe until 2014. ( should have done a 30yr., too late now)
Best decison I could have made. I would have been screwed if I waited.
One year later- Zillow now has my home for less than what I initially paid for it. I would have been underwater with a higher payment, and i'd proabally be looking at foreclosing.
Handwritings on the wall, run to the bank and get fixed. Even if you have to bring cash to make up what your negitive, its worth it.
I agree with the both other posters.
and will add
1. interest rates wont go much lower
2. example: If you have a house that is worth 300k and owe 240k currenly you should be able to get away without paying PMI. Let that house go down to 250k in value and you will likely be forced into paying PMI when you Refi. Which adds a few hundred dollars a month depending on home value etc.
3. weigh out your length you are planning to stay vs the risk. If you are currently in a 2.% IO and could likely move before it adjusts then I would say dont touch it. but on the other hand what is the insurance and piece of mind worth to you. If interest rates hit 10- 12 % by 2009 how much extra would you be paying a month? considering a refi could give you piece of mind for about 3-5k depending on value.
Do you have prepayment penalties?
You are in a bit of a precarious situation if you plan on moving soon. You will still owe the original principal regardless of what you do. Some banks will not let you refi unless you have some equity. Also, be advised that your new refi loan will have a larger monthly payment.
The best course of action depends on what you can afford: if you can afford the new payments, get to a fixed loan; if you can't, stay where you are as long as possible.
Interest only, I would assume you can't afford the house in the first place, in which case, refinancing won't help you what so ever. You could just send some jingle mail and get rid of the headache completely.
Lender rating
My advice would be to contact a mortgage professional and take a serious look at it- the forum is a good place to start.... but there is too much opinion and joking going around....
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I don't know how someone could conclude that just because a borrower chose an interest only loan, they cannot afford to pay principal. The original poster did not state anything about how much principal they have paid so far.
I will admit that there are a lot of people who chose interest-only for affordability. That's always bad, because the loan has to be repaid, and if you don't pay principal in the first -say- 10 years, then you really have to pay big principal in the remaining 20 years. I guess I am old school to actually think of paying off.
At least aldreth wrote "I ASSUME". Some would have just stated "you cannot afford".
-Peter
>> Handwritings on the wall, run to the bank and get fixed. Even if you have to bring cash to make up what your negitive, its worth it.
Agree.
What do they base the value on zillow? How do they come up with that figure?
My wife and I have an interest only loan, the value of the house dropped and she has lost her job. It makes it almost impossible for me to continue living in this house. However, I owned a home before I got married that is solely in my name. My dilema is, if I walk away from this house and let them foreclose, is it possible that they could make a claim against the other property in my name?
thelucy2@cox.net
Lucille
It depends on the laws of your state. Go see a Real Estate Lawyer asap. It will cost you several hundred dollars, and it is money well spent. Good Luck.
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NEED ADVICE: We are in interest only loan and values went down.............
nickey12
Contributions: 2
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I need to convey to my husband we need to get out of our int. only loan which adjusts in 2009. Our home will be worth less then what we owe
if it goes down the next couple years. Right now we are right on the edge. Should we try to get out of the adj now
or wait it out????
PLEASE HELP
regdomnick@hotmail.com
Thanks
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