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Upside Down on Mortgages |
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Hi. I'm new to using these forums and wanted to ask a question.
A little back-ground, I currently own two homes in CA, one was my original house and I decided to trade-up in 2004. I took equity from my 1st home to buy a newer house and now the 1st home loan is more than what I can sell the house for. I am unable to pay even the interest only for both houses and both principals keeps adding-up, but I do want to keep the newer house and would be able to pay for it if I didn't carry two mortgages. I have been unsuccessful in selling the 1st house for the right price and renting it out will not be enough to cover the mortgage.
My questions are:
1) If for example I owe $500,000 for my 1st home and could only sell it for $450,000 and I do not have any cash for the difference (no equity in my second to cover) what happens? Am I still liable for the difference, what are my options? Would it be better to foreclose, I'd rather not, but I'm afraid I am end-up losing both houses if I don't do something?
2) Would it make sense to try and refinance one or both homes instead and wait it out, although I may not be able to afford it anyway? By my calculation loan would be about 97% of the value, is it still possible to get loans at these levels?
Any input would be great, thanks. |
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The only thing I can suggest is to talk with your lenders and ask for help. These days they're anxious to avoid foreclosures and sometimes they have "workouts" to suggest. Otherwise I'm afraid I don't have any solution for you. |
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Edith
Originally published on January 30, 2008 |
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