Please Give Me A Piece Of Mind!

I need some help, short story...
My boyfriend and I purchased a house during a "lottery" nearly two years ago. Given the great housing market (NOT) that is currently going on, we are almost at a $100,000 lost in our value.
He wants to do a short sale, I am totally againist it, for the simple fact that I have a 780 credit score! We should have never even been approved for the house, but at the time they would approve anyone. We are paying $1800 for a $220,000 loan. We are extremely young, and have a lot of remorse for even purchasing the house two years ago. We have tried to refinance to get a lower payment and we obviously can't since the appraisal is not high enough. We have talked to our loan company about getting a loan modification given the "hardship" and the investors denied it!
Please tell me that there is something that can be done besides a short sale or foreclosure.

increase houshold income, or, reduce expenses. hang in there

get out before it's a 150K loss?!?!?!

earning back your credit score is easier than earning $$$.

I wonder if anyone has tryed making reporting the account "paid as agreed" rather than a derog a condition ofthe short. It's no skin off the bank nose. esp. if they were threatened w/ a lawsuit for predatory lending, bad underwriting, etc.

We have talked to our loan company about getting a loan modification given the "hardship" and the investors denied it!

I am guessing that you got something close to 100% financing when you purchased your home.

As your local bank if you can get an FHA refinance to lower your monthly payments. Maybe there is a refinance program available that will give you up to 95% financing.

If that is not possible, ask your lender what percentage of your property's value they will refinance. Assuming that your property is worth more than your loan balance, maybe you can refinance up to 80% of your properties value, to pay off a significant portion of your current mortgage loan.

Borrow the difference from

family
friends
credit card cash advance
retirement account
your employer
life insurance policy
margin on your brokerage account
unsecured loan

anything else of value that you can sell or mortgage

You never lose money until you sell. The house made sense to you when you bought it, and you apparently can still make the payments. So you bought at the top of the market. Lots of people did, including some who can't make payments, so count your blessings.

I'd recommend you just enjoy the house, ignore the negative news, and maybe even make a few extra principal payments when you can to chip away at the balance. The market will recover, and unless you have to move for some reason, you'll still end up ahead over time.

Is great credit worth $100k to you? I had to answer that question myself when I got stuck with a property whose value had dropped and I was having to make $1,900/mth pmts on an empty home in cold NH.

I decided I would rather rebuild my credit vs depleating my assets to sell it. I let it go back to the bank last Aug and have no regrets yet, but I haven't had to get another bank loan since then as I still had my cash.

Another thing is whether or not a lender would persue the shortfall (deficiency judgement). Since my loan was a purchase loan, they couldn't. While your credit is still good, you may want to try to buy as smaller more affordable place and then let come what may with your current home.

What part of the country are you in?

Gone are the days of accountability, obviously.

The commute did not change. Sure, gas prices are high, but that is not new either. What kinds of cars do you and your boyfriend drive?

Did you plan to sell after 2 years when you bought? Why did you buy that house in that location? Why did you take the loan that you did?

Look carefully at solutions posted above; there are many. Ask why you were denied a solution. LEARN for your future and your character/integrity.

In 1977, when I bought my 1st tiny townhouse to protect and build for my family, interest rates were 18%. When we sold in 1985 it had appreciated by 50% (30K to 45K) and rates were 11.5%. Slow and steady built a strong future. Look for solutions, not running away.

What am I missing that the advice is to walk away from an agreement made? What am I missing?

Ceinvests, I would agree with you in principle about walking away from an agreement. Would you think that there is ever a time to walk away? Every loan that I ever got included an understanding that "if I paid I stayed, and if I didn't they would take the house". Also granted that this "give up idea" could become a pattern in life that could be problematic in other areas.

It is not without some consequences if you let the bank take the home as your credit is destroyed thus cutting off bank loans. In my case I also lost a $15k deposit.

I know that if there is no end or workable solution in sight that for me it is best to pull the plug sooner than later. I want to live to fight another day.

I just don't get into a deal I can't follow through on. Period.

This may be a generational thing- everyone says I am old fashioned. The up side is everyone who knows me knows that my word is good, and that I will follow through with the deal come hell or high water.

I do understand that for most people these days it is only about what is best for them. Our culture has changed, and not always for the better...

Chris

Ultimately you have to decide what is best for you. Just make sure you check out all the options. It seems you may have some knee jerk reactions to changing situations instead of thinking them through completely. (We need to buy this house it is our only chance to buy.) ( We need to move as gas prices are too high.) ( We need to walk away because ....)

Maybe posting some accurate numbers might help - like your current Interest rate, estimated appraised value, mortgage balance, etc. That $1800 payment how much of it is Principal, how much interest, how much taxes, insurance.

There are many creative ways to keep a house. I just helped a friend keep hers. She bought at the top of the market, was working 3 jobs to keep up, then got laid off from her main job and took a less paying job and was about to let her home go.

She had a completed basement and we found that the State offers people up to $1600 a month to house mental-challenged people. She has to give them their own bedroom and provide supper for them and drop them off in the morning at a center of some sort. It more than pays her mortgage and she got to quit her two part-time jobs.

I am not saying you need to go to that extreme, but there are opportunities out there, you just have to search hard and be willing to do what you can. I am with Chris, my word is gold. I will suffer myself by eating ramen noodles rather than go back on an agreement I make.

[ Edited by dnvrkid on Date 04/01/2008 ]