Foreclose or Refinance?

InActive_Account profile photo

I have a couple of questions, and thought that this is a good place to
look for answers. Sorry if this is long...
In 1998 my wife and I bought our first house. Our credit was "less then
stellar" and we didn't have 10% down. So we did a deal with a mortgage
broker where we got 100% financing. One mortgage was for 80% of the
loan, the other was for 20%. the purchase price of our house was
$130,000. We bought the house in March of 1998, and then in October of
1998 we went to The Money Store to get a home improvement loan. That
loan was only for $13,000. The reason we did this, is because the house
was in dire need of a roof (we knew that when we bought the house) as
well as some cosmetic work (paint carpet, floors, landscaping, etc.).

Now, this seemed like a good deal. We figured that within a couple of
years we would just re-finance them into one.
Skip to August of 1999. Our first attempt at Re-financing the house. The
lender tells us, that, "because the home improvement loan is less then a
year old, we can't re-finance it yet."
So we wait....

In January of 2000, we went to a "credit counseling" service to get our
credit cards paid off.
Shortly thereafter, we go to get our mortgages refinanced into one. But
this time we are told that we can't, because we are in "credit
counseling" which the bank see's as bankruptcy.
We hell, if we can't re-finance, then we might as well file bankruptcy.
The credit card companies who were so willing to take our interest
payments, were not so willing to work out a deal to get their money
back. So we filed Chapter 7.
Now, we kept the house(3 mortgages), and both cars. But now we didn't
have any credit debt. Bankruptcy was final in late august 2000.

Skip to August 2001. We were told, that we could refinance the house a
year after the bankruptcy. So almost a year to the day, we go through
the motions. Total of the three mortgages is $140,000 and some change.
We have the house appraised...appraisal comes in at $156,000. Bank says,
that because the chapter 7 is only a year old, they can only refinance
85% of the value of the house. So, now we still have 3 mortgages, and
one of them bumped up their interest rate right after we filed
bankruptcy. Almost as if to say... "we got you by the yam-bag now
buddy!" So now with taxes and insurance, our house payment is almost
$1800 a month. This is almost half of my take home in a month, and I
need to get it lowered.

So now my wife and I are seriously thinking of either selling this
house, or just letting it foreclose. I don't really know much about
foreclosure, but I would rather not let it get to that. Selling it could
take up to a year, and I don't want to wait that long.
I make 60K+ a year, and have been in the same trade for close to 16
years, with 7 of those years at the same job.
Where can I go for help. Can I refinance now? What happens if I
foreclose and what are the legal ramifications?
Any help and advice is greatly appreciated.

Comments(1)

  • 1st May, 2002

    To asnwer your question is not an easy thing to do . However when dealing with a motivated seler the main reason they would consider seller financing as an option is to get out of the financle responsabilty of making payments from there own income. when this is the reason the comon solution is selling on land contract because the title dosn't transfer names they can keep there current mortgage and make the payments from what your paying them . If they happen to be motivated and need cash as well you can ocmplish this by having the seller create a mortgage and selling it at the close they get cash (at a slitly discounted price of the face value of the mortgage they maid) if they need just some cash you could have them create a first mortgage for the amount they need and a second for the amount they would recive in payments make the second at a lesser instrest rate for your benifit! the first mortgage must be enough to cover any dets that are currently on the property so they can be setteled at the close this is the only way to create a first mortgage position if there's al ready one in first position. i've just touched a little on this topic but i really need more dirction to help you out more if your looking at a deal or just want to have some more indepth asnwers please feel free to respond

Add Comment

Login To Comment