Changing our current mortgage?
We bought our home in 2006 with the intent of only keeping it for 3 years and then selling it to buy something bigger. We did a first and a second Interest Only mortgage and are with B of A but our loan was from Bank of NY. Due to the drop in the market and the fact that all of the homes around us are going into foreclosure, our house value has dropped down to 192,000 when we owe 232,000 on it. We are looking at needing to keep the house until the market comes back otherwise we would take a pretty big loss if we sold it now. We contacted our current lender about seeing if we could combine both loans into a conventional loan so that we can start paying towards the principal instead of just interest. No luck. Even though we have great credit, in short, we are being told that “since you make your payments on-time and are in good standing, there is no motivation for us to help you convert your current mortgage – we will only assist you if you were to no longer be paying on the mortgage”. So let me get this straight – BECAUSE I can afford my mortgage and BECAUSE I am in good standing with you and BECAUSE we (thankfully) have good employment history and are financially stable……you don’t have an interest in helping us stay good customers by restructuring our mortgage so it makes sense? Hmmm…that doesn’t seem like it makes sense to me.
We have looked at doing a HARP loan but because the loan came from Bank of NY it is not an FHA loan so – that doesn’t help.
It’s just frustrating because I feel like we are being penalized for NOT falling behind on our mortgage because there is no motivation to help us do anything about it since we’re not in jeopardy of losing it at all. Granted, I understand it was a risky loan to begin with, so I can’t point the finger at anyone but us, we get that and aren’t disputing that on any level – but there has to be SOMETHING that we can do, right?
Since prices are so low right now in our area, we are looking at buying a home for ourselves and then renting our current home out until the market comes back a little, but how does that work? Would THAT let us finally qualify for re-doing the mortgage on our house if it turned into a rental?
Thanks for your quick responses 🙂
In answer to a couple of the questions – both 1st & 2nd are with B of NY, so they are in the same place so there are not 2 different investors.
As for the interest question – the 1st is a low interest rate and the second is a fairly low rate (but obviously a little higher than the 1st since it is in second position).
And in answer to anyone’s curiosity – yes, I can bite the bullet and say we made a stupid move on this, so I am not trying to point the finger at anyone but us. The truth is, we had made very good, safe moves on our previous homes (at least 10% down, 30 year fixed, principal, interest, mortgage insurance and property taxes) and we decided to be stupid and take a risk thinking we could move in on an interest only, then sell it for a little higher about 3 years later and move into something different. Unfortunately, half of America had the same thought we did – and yes, we are part to blame for the situation we are all in. I’m a big en
enough to say that yes – we were wrong, now we’re just trying to fix it.
Thanks again for the responses everyone 🙂