Re: Underwater mortgage & seeking advice.
09-28-2012 11:54 AM
At the recommendation of my fiancee, I am posting in hopes of getting some insight on what I should do in regards to my mortgage.
Some quick info:
- Monthly mortgage payment: $1365
- Mortgage balance: $179,500
- Mortgage terms: 30 year fixed rate loan at 5.50% through JPMorgan Chase
- Condo fee: $515 a month
- Credit score: in the 790~815 range
I fall under the "Borrowers who are current, but underwater" category of the settlement information. I originally bought the condo nearly seven years ago, paying $227,000 with a $3000 sellers assistance from the previous owners. I put 20% down to avoid a PMI, and my mortgage was a 5/1 ARM at 8% interest. Four years ago I refinanced, borrowing $190,000 on a 30 year fixed rate mortgage with a 5.50% interest rate, and the unit was appraised for $199,000. The property is a condo unit in Greenbelt, in Prince George's County, Maryland, which has received some national press for the poor status of the housing market in the county, and the number of foreclosures and underwater properties. About three & a half years ago several condo units in my building and surrounding area were foreclosed, selling at a fraction of what I paid, devaluing my property to the point that my mortgage principal was more than what my property was worth.
Earlier this year, in doing research on refinancing my mortgage I was made aware of just how much this has affected the value of my property, I have contacted JPMorgan Chase by email twice, and received responses, but their response is for me to apply for mortgage modification assistance, a system that was in place before the federal settlement in February 2012, and assistance that I do not seem to qualify for when reading through the details. I am hoping the settlement can help me by reducing my principal, and lowering my mortgage payment. When I look at estimates for the property (using Zillow, the Washington Post real estate guide, looking at P.G. County taxes, looking at other recent sales in the development), the value of the property looks to be in the $100,000 to $140,000 range, and based on what I still owe that means the loan-to-value is 128% to 180% less than what I originally paid. About 39% of my annual income after taxes goes towards my current mortgage; I have not missed any payments, but with so much of my income going to the mortgage, then about 15% just going to condo fees, and then 12% going to other debts (student loan, car loan) I am finding it difficult to build savings. On top of this, my condo fee (which covers everything except cable & internet, and my condo insurance).
My fiancee & I want to move in a year, and we have talked about different possibilities for the condo, either refinancing & continuing to make payments and renting it out (we are five miles from a large, public university), or selling the unit at a major lose. If we sold the unit, I don't know if we try to default on the current mortgage and force a short sale. I am stressed out about all of this, and I am hoping this is a good first step to figuring out what I should do.
If there is additional information that is needed from me, please let me know.
Look at doing a HARP refinance... if you are current on your mortgage, and your mortgage is backed by Fannie Mae or Freddie Mac, you should be able to refinance to a lower interest rate. Keeping the condo and renting it out seems like a good option, if the rents in the area are comparable or more than what your note will be after the refi. If you rent it out, you can sell it later on, or just keep it as an investment property. Maybe even let your kids stay there if they go to that university for school.
I would start looking at a HARP Refi immediately.
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