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Mortgage forbearance

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Contributor

Mortgage forbearance

BK 7 D/C     4/2016

 

I am relocating (required to) and taking on a new job. To facilitate this I will need to sell my house, which I did not reaffirm, but have continued to make regular on time payments on since I purchased it in 5/2012 for 225K. The new job is a substancial paycut in the short term, with contracted rasies, cost of living raises, and longevity pay, over the next 5 years more than doubling my salary. With the pay cut, I will not be able to afford my mortgage and a rent payment simultaneously. I was considering asking my mortgage lender for a forebarance, for a couple of months, in hopes that with aggressive marketing and pricing, I could sell the home in that time frame. I owe approximately 170k, and as of the CMA done by my realtor this month, The value is about 240K - if some minor work is put into it before listing.

 

Through some basic google research, there is a mixed review if Forbearance has an affect on your FICO score, but nothing specifically addresses asking for forbearance post BK 7 D/C. I realize I could just stop making payments, and no negative affect can be taken on my report as the mortgage has been D/C, so it wouldsee the same would hold true on a forbearance? Does anyone have any other thoughts on a better way to manage this situation. My rebuild has been going well. I don't want any back slides. 

 

Thanks. 

 

Message 1 of 11
10 REPLIES 10
Senior Contributor

Re: Mortgage forbearance

I'm no mortgage expert. Why not rent it out? The way apartment rents are going now. Its cheaper to rent a home than a apt. Least here in FL.





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 2 of 11
Contributor

Re: Mortgage forbearance

I am moving to take a job with a FD as a medic ironically. I have considered, renting it, but i significantly doubt I can get enough rent to cover the mortgage, and the increase in insurance (inground pool was great to have, but an insurance nightmare for tenants last I looked into it) Having to kick in the difference isn't a bad short term plan though, the bigger concern would be dealing with any issues after relocating some distance away. The rent already wouldn't cover the mortgage, adding in a property management company on top of it would just compund the cost. Can't hurt to make some phone calls, and inquiry about cost for property management company, and insurance again. 

 

Thanks 

Message 3 of 11
Senior Contributor

Re: Mortgage forbearance

Oh cool brother/sister. Good Luck on the move. Hate to see you lose it or have to give it up. Yeah the bene's take a while to kick in. But they do pay off in the end. I hope you can work it out and not lose out. Maybe get a part time job in the ER. I work 2 part time jobs. Cant work for private ambulance companies. So ER and Daytona Int'l Speedway Fire/Rescue. Always something going on at the track. Summer time is NASCAR Racing Experience. So I stay busy. It might help. Never know.





My posts are JMHO. I DO NOT claim to be a FICO expert. Just sharing my experiences from rebuild to recovery after BK DC. My siggy is not to brag at all. Just to show fellow members what can be accomplished when you do it right and play the FICO Credit Game.
Message 4 of 11
Senior Contributor

Re: Mortgage forbearance

Well, with a realtor estimate of $240k value and you owe $170k that's some pretty good equity so first of all don't take any chances of losing it through foreclosure.

If you bought it in 2012 and didn't reaffirm the mortgage when was your BK? And what is your credit score? I'm asking that as I think a good move for you would be to borrow some money so you can afford both the mortgage & rent on a new apartment until the house sells. Either some new CCs and/or a personal loan or both. Interest rates on mortgages have and continue to drop so it's a pretty good buyers market, and you have some room to drop the selling price for a quick sale, it should sell in 2-3 months so you just need enough $$$ to tide you over until then.

Figure a max of 10% selling cost, realtor commission around 6% plus a couple grand in closing costs, so you're looking at a gain of at least $50k if you work out keeping the mortgage current and paying rent. And it's non-taxable, it qualifies as your primary residence.

 

EDIT: And for renting a place for your new job you don't have to immediately get set up in a 'nice apartment', you could put your furniture & things you don't need into storage and just rent a room in someone's house. google "rooms to rent (city)". When I lived in Honolulu in the 90s I always just rented a room in a shared house as apartments were too expensive, and I made some nice friends as roommates


Fico 08: 720/721/719 TU/EX/EQ
Message 5 of 11
Contributor

Re: Mortgage forbearance

My entire career I have maintained multiple jobs. This particular one doesn't allow any second jobs for a year, and even after that they are subject to approval, which is why my income has dropped significantly. I'm okay giving up the house, I plan on making a career , and starting a new life in this new location.

Message 6 of 11
Contributor

Re: Mortgage forbearance

Definitely want to avoid foreclosure, thats why I was wondering about forebearance, I was hoping with a 2/3 month forbearance, and a little luck since it is a sellers market currently I could get it all wrapped up before the end of this year. I thought I included my discharge, it was 4/2016, I will admit I am not as on top of checking my score as I used to be, Ive been in the garden for some time. Creditwise from capital one has me at 710. I do qualify for personal loans, I have gotten prequals for as much as 50k from your typical lending club/bestegg etc... but the rates are ridiculous, I also realize a personal loan would be short term, and could immediately be repaid once the house is sold but I'm hesitant to take on any more debt like that, its a slippery slope, and one I have already fell down!

 

I have a place lined up, that definitly leaves a lot to be desired, and is quite inexpensive. I also have to manage the pay cut I'm receiving and the inability to work Overtime/second job for some time. (not by choice job requirement.) 

 

I do appreciate the idea's though and will keep them in mind. 

 

 

Message 7 of 11
Senior Contributor

Re: Mortgage forbearance

Well then, to address your question of asking for a forbearance: It will be hard to ask for a forbearance without telling them all the details of why you need one: significant pay cut, moving away & leaving the house vacant and putting it up for sale, and no lender wants to hear that. To them it makes their loan much more risky, and they may well think why give you months of forbearance when they may end up foreclosing and anyway? But if they do grant a forbearance or even end up foreclosing neither would affect your credit report/score - since you didn't reaffirm the loan it was discharged in BK so there is nothing for them to report, credit reports only report debt & payments.

 

I get your reluctance to take on debt, a BK is very good at teaching us the danger of taking on too much debt, i have a BK from 2010. But a BK can also teach us that used wisely credit can be a useful tool. To my thinking an infusion of cash from credit to keep your mortgage payments current while living reasonably comfortable as you new job grows and you sell the house would be a wise use of credit.If you did NOT have the probabbility of netting a nice profit from selling your house then taking on new debt while starting a new job with big pay cut would be very unwise.

Those unsolicted offers of a personal loan will have ridiculous rates, try Prosper or Lending Club, they will quote a rate with a soft pull, it's only a hard pull when you actually apply. 


Fico 08: 720/721/719 TU/EX/EQ
Message 8 of 11
Contributor

Re: Mortgage forbearance


@DaveInAZ wrote:

Those unsolicted offers of a personal loan will have ridiculous rates, try Prosper or Lending Club, they will quote a rate with a soft pull, it's only a hard pull when you actually apply. 


Both are quoting rates 20% Plus. I wouldn't need the loan long, so while the rate is terrible, in the long run it probably doesn't matter. 

 

 

Thanks. 

Message 9 of 11
Member

Re: Mortgage forbearance

Don’t let that equity go. Get it on the market yesterday and ask your agent to price it for a quick sale, 30-60 days max. If you get a contract and only miss one or two payments before closing you’ll probably be fine. Trim the yard and clean the house really well. Any repairs needed can be negotiated at inspection time. Sounds like you have room to wiggle and w a good agent this should be an easy sale.
Message 10 of 11
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