Help! Sell at loss or modify & stay?

[seabell]

Need Advice....been in the house 10 years! Had a good income, good down payment, etc. Then, in 2007 everything went down the tubes...income from business is next to nothing... and the house is now worth just a few thousand more than I owe. I have a CHASE (WAMU) option loan that I now pay interest only at 6.25%. I got a BOFA second in 2006, interest only at 2.49. I can't afford the payments since my income has dropped to 1/3 what it was.
I tried to sell for 9 months, and now have a low-ball buyer. After paying 10 years I will walk away with a just few thousand in equity. I have read all about the modifications, DO I SELL NOW or start the mod. process and try to keep the house? I would need CHASE & BOFA TO DROP THE PAYMENTS IN HALF, AND KEEP THEM INTEREST ONLY FOR 3-5 YEARS in order to afford to stay. I am worried that I am never going to get another house, and I am walking away from any potential gains that may come in a couple of years !!! NEED ADVICE!! HELP! WOULD I QUALIFY FOR A MOD????

[Evan Bedard]

Hi seabell welcome and thank you for joining the community.

You should definetely go for a modification first if you would like to keep the home. I would first off suggest that you write a hardship and have all your income documentation ready before you call the lender. Information such as paystubs, bank statements, tax returns, etc. You can also find great examples of hardship letters for you to follow here:

Examples of a Hardship Letter

[seabell]

Do you think I have any chance of getting them to cut the interest only payments in 1/2 for 5 years, then go fixed? I only have a very small income from my business right now, plus partial unemployment, and will have to find a job if the business doesn't improve. Thanks, B

[Evan Bedard]

Yes I believe you do have a chance. I have been seeing modications that have cut payments dramtically at interest only for five years and then fixed principle and interest for the remainder of the loan. You may want to mention this in your hardship letter..

[briknope]

I would sell now if you can, break even on the loan and buy something more affordable. It has been proven already that one has to go through major default on a mortgage to get any action from a bank. Sacrificing credit in most cases. Once the credit is shot, then buying another home is next to impossible. I really don't know the home market in your area, but suspect there may be many vacant homes in your area that will sell for cheap, dragging your property value down. Think about it, why would any bank give assistance to anybody that is current on their mortgage? The incentives are not there.

Anyhow, just my opinion. Take it for what its worth.

[Evan Bedard]

Seabell and briknope,

True that it seems to be more difficult if you are current, but if you read around there have been quite a few homeowners recently who have achieved modifications without missing a payment..

Stay strong and keep us posted!

[seabell]

Thanks for the info. I should mention that my house is in the eastside of Seattle area. Also, I thought about getting something smaller, but I won't have enough down now, and I have heard how hard it is to get a loan. I don't think I would be approved since I am on partial unemployment.