topic Re: Help! We can no longer afford our mortgage, trying to sell - Can't get financing for a new home. in Bankruptcy

Help! We can no longer afford our mortgage, trying to sell - Can't get financing for a new home...

Anonymous — Tue, 12 Jan 2010 20:09:12 GMT

Due to my loss of employment, we can no longer afford our monthly mortgage payments. We have scaled back everywhere possible, but we still can't survive with the payments we have to make.

We've applied for loan modifications; reduced mortgage rates; deferrments; Obama's Home Preservation Program; adn so on. Here is the catch - My husband earns too much! We are not living above our means - we are just living paycheck to paycheck and that is not covering our bills.

We have very low balances on our credit cards - they are retail cards. I pay a few dollars over the minimum every month.

I did settle a large balance on a credit card, but I met the terms. Our credit is in the toilet - we don't even qualify as cosigners on our son's student loan! This is interesting - I have a student loan with Wells Fargo. In the three years I've been making monthly payments, I have never been late! They just offered me a discounted interest rate - but, they won't approve my sons student loan.

We put our house on the market, but I really don't think we'll be able to get financing for a new home. We have two young children at home and one in college.

Our mortgage is not behind, yet - My FICO score is 685 - not terrible, but about 3 years ago we almost went into foreclosure and it shows on our credit report. My husbands score is 650 or so. Our scores seem to change daily.

How do I know if Bankruptcy will worsen our situation or improve it?

Re: Help! We can no longer afford our mortgage, trying to sell - Can't get financing for a new home.

Anonymous — Fri, 15 Jan 2010 16:00:12 GMT

It depends on what you want to accomplish, considering BK.

I wouldn't worry about buying a home right now if you sell. Go with rent, it is a renter's market right now. Many times you can rent cheaper than buying, especially when you consider you don't have the cost and responsibility of home maintenance and repairs.

If you can't afford the home, sell it and rent something more economical. Work on getting debts paid and credit improved. Work on savings and paying student loans. Once you are back in the saddle, then look at buying.

Too many people think they need to buy before they really should.

If you are upside down on the home, possibly you can look into a short sale with lender. But this does usually require you to be in default....which it sounds like you are about to become. Short sale is where the bank accepts a buyer for less than the amount of the loan as satisfaction for the loan. This will hurt you credit as "settled for less than owed" or something like that, but right now you need to worry not about credit but finances.

IMO

Re: Help! We can no longer afford our mortgage, trying to sell - Can't get financing for a new home.

Anonymous — Fri, 15 Jan 2010 17:00:05 GMT

Thank you for your response - I believe you are right, renting is going to be our best option. We are not upside-down on the mortgage - house values at approx $420,000 - our mortgage is $310,000... With barely any credit card debt, I guess it doesn't pay to declare bankruptcy - I was thinking it would help us keep this home.

How do I best broach the subject of short sale to my bank? Do you know the questions they will ask so that can prepare?

I really appreciate your assistance -

Re: Help! We can no longer afford our mortgage, trying to sell - Can't get financing for a new home.

Anonymous — Fri, 15 Jan 2010 23:44:12 GMT

A short sale would only apply if you were upside down and the home was worth LESS than you owed. According to your post you have $110,000 equity.

What you need to do is post the home for sale at a discount to move it quicker. The more motivated to sell, the more you must reduce the price potentially. But you don't want to go into default or enter foreclosure.