My husband wants to refinance with a 3 year prepay penalty loan?
Posted in Renting & Real Estate on 07/20/2009 12:23 pm by admin
stephanie5 asked:
We have a home that its rent is about half of the mortgage. My husband wants to get a loan with 3 year pre-pay penalty and take out some money as well. This way he wants to lower our monthly payments but at the same time, get the equity as cash. In 3 to 5 years if the housing market is still bad, he wants to let go of the loan and foreclose, and if the market is good, then he wants to sell. We are a little squeezed for money now and I think he is not thinking rashionally. Is this a good thing?? We have a great rate of 6% fixed now on the house, but we got a second mortgage on it that is making our payments a little high. What are the consequences of getting such a loan and should we just try and pay the high mortgage. Who knows what’s going to happen with home prices? This is a house worth 1.2 mil and we owe about 950 thous on it. Help me.
MILES
We have a home that its rent is about half of the mortgage. My husband wants to get a loan with 3 year pre-pay penalty and take out some money as well. This way he wants to lower our monthly payments but at the same time, get the equity as cash. In 3 to 5 years if the housing market is still bad, he wants to let go of the loan and foreclose, and if the market is good, then he wants to sell. We are a little squeezed for money now and I think he is not thinking rashionally. Is this a good thing?? We have a great rate of 6% fixed now on the house, but we got a second mortgage on it that is making our payments a little high. What are the consequences of getting such a loan and should we just try and pay the high mortgage. Who knows what’s going to happen with home prices? This is a house worth 1.2 mil and we owe about 950 thous on it. Help me.
MILES
07/23/2009 at 10:12 pm
LUIS
Home price is dropping right now and will continue to drop the next few years. Good luck with your cash out refi., your house isn’t worth 1.2 mil.
07/27/2009 at 2:08 am
TOMAS
You can get the loan without a pre-pay penality. Those penalties are negotiable and should not change the loan rate much (maybe a quarter or half a point at most, if any). If you guys are thinking of the foreclosure route, you might want to look into an option ARM or a fixed option pay loan. That will buy you some time while keeping your payments low.
Let me know if you need additional information or if I can be of any help. Also, keep in mind, the most he might be able to get out is only 58k.
Regards
07/27/2009 at 10:01 am
GRANT
The 1.2 million value. Recent appraisal? If not you want to look again. you may be stuck depending on your location.
Letting go of the loan will destroy your credit. Stop spending the extra money on stuff you dont need. I am going to assume—-that there are credit cards and car loans in the mix. So even assuming they were cleared up with the 2nd mortgage, play poor for awhile and pay off whatever bills you can to keep the house.
07/27/2009 at 1:36 pm
ZACHARY
Your husband is making a very poor financial decision that will render him unable to purchase another property, including refinancing his own, for a minimum of 4 years.
Furthermore, do NOT think that a lien cannot be placed against your primary residence if the foreclosure sale from the secondary residence, doesn’t cover all of the expenses.
Perfectly legal, and for dual homeowners, they WILL go that route vs seeking a judgement, b/c they know they have “caught” your primary residence and will eventually get paid…WITH interest.
07/28/2009 at 5:08 am
KENNY
I would really take your time. Refinancing is a good thought, but the lenders are cautious right now. You may get suckered into a bad deal if you’re not careful. The market I believe will turn around in 2008 mid-year.
Maybe you can stick it out until then…
Hope this helps!
Author is lead writer for: