I want to share a situation that comes up all too often in this market: I got a call a few weeks ago from a woman that bought her condo in 2005 with a 5% down payment. She was put in a 3/1 Interest Only ARM (fixed at a set interest rate for the first 3 years of the loan; adjustable after 3 years at a Principle & Interest payment), which at the time, was at an extremely affordable interest rate and monthly payment. She was given the assurance that within the 3 year period, she could simply refinance out of the ARM and into a longer-fixed term loan product.
So here we are, 3 years later and her monthly payment is about to increase by $630. She’s a new client and calls me about refinancing, but unfortunately, I can’t help her because her home’s value has gone down to a point where a bank isn’t willing to take that type of risk. I could get her an FHA loan, but her monthly payment will increase by more than $630 (the scheduled adjustment), plus she would have to pay closing cost fees and an FHA funding fee.
I can’t give her too many options that will help keep her monthly payment around the same level of what she’s currently paying, but the best possibility and recommendation I can give is to have her contact the bank that has her mortgage and see if they can do anything. If she gets a discouraging response, call again because she could get through to a different, more sympathetic person. All she needs is to keep her monthly payment at the same level and she’ll continue to make her timely, steady payments. So she called, she asked, and thankfully they’ve waived her scheduled increase for the time being. A testament to the fact that it never hurts to ask!
It costs a bank a lot to foreclose on your property. if your mortgage is about to reset and if you’ve made on-time, steady mortgage payments, call me and I’ll be honest and forthright about your options and the total cost involved. If I can’t help you or if it’s just not feasible, then call the bank and they may be willing to work something out with you.
