I am seriously thinking of walking away from my loan, beginning with Augusts payment and very much would like some thoughts on my situation:
Home in Vallejo Northern California
Bought in 2001 for 280k with both first and 2nd loans
Refi'ed 1st time in 2003 to a 30 yr fixed, 290k loan at approx 5.8%
Refi'ed again (current Loan) in 2/2004 for 300K at 5.42%. House may be worth 200K.
Currently owe 258K, and payments are $1988 per month, which include: $1688 - principle and interest, $204 - County Tax, $96 -Insurance
This 30 yr loan is with PHH sold by USAA. I have all my other accounts with USAA including auto loans, credits card, IRA, etc
And I also have an Equity Loan against the home, with USAA, with a balance of 20K. The original loan amount was 30K and the 10K was mostly spent on home improvements and debt consolidation.
I also have an auto debt of 13k and credit card debt of 18K.
I'm am employed and have been able to afford my payments, although with not much left over for savings/retirement.
My primary reasons for walking are that my home worth will not be high enough again, to where I can sell and move to a better/larger home. And I would like to get my kids into a better school system. In other words, I COULD stay and be in OK shape, but feel trapped in that this would be where I'd live out my life. This home was to be temporary while my three kids were young.
My primary questions are -
Since I'm not looking to renegotiate the loan, but just "move on", does this plan seem feasible overall? From reading the forums, I don't see many pitfalls.
Should I also stop paying the Equity Loan payments? And, if so, should I stop the 2nd loan first and then the primary loan payments after, as has been suggested? Or stop paying the 1st mortgage and then maybe the 2nd a little later. Given the equity loan is with USAA, with my other accounts, I think I'd like to "test the waters" first with PHH.
And, since I don't likely qualify for any relief, should I submit the HARP paperwork?
I don't fully understand the "recourse vs., non-recourse" and how it applies to my situation, and would appreciate some insight here, as well.
How about tax and insurance? Should I continue to pay during the whole process? I'm assuming so.
Thank you very much in advance, and if I'm missing important details - please let me know.