I purchased my home in 08'. First time, I had little guidance. My first mistake was buying a manufactured home in a park. It's beautiful with very reasonable rent but I had to sign a contract. My second mistake was thinking I understood all the papers I signed. I applied for an FHA Loan but didn't want to use the home buyer�s credit that was available at the time.
The manufacturer, who was also the broker, was also the go-between for the bank, US. Bank.
I agreed to a 20 year, 80k$ loan at 7.5%. I asked three smart questions at least.
#1, can I refinance in the future? US Bank said yes.
#2, Is there a penalty for paying the loan off early? (This was my plan initially) US Bank said no.
#3, Will the interest charges be for the entire amount of the loan or for the remaining owed? (I didn't want to pay interest on $80k for 20 years but was willing to pay interest on whatever was still owed on the loan) US Bank said as the balance owed shrank so would my interest payments.
The manufacturer/Broker's office was vacated the very next week. Ours was the last house they sold in Southern Oregon.
Skip forward to 2010, I go to US Bank to talk about that refinance. They inform me that;
A, I don't have a mortgage I have an installment loan.
B, They don't refinance installment loans, ever. (I have found zero lenders who will do this if you don't own the land)
C, I will pay interest on the full loan amount until it is paid off.
Now in 2012, I am unemployed; my partner is on short term disability. We have never been late with a payment and my credit is near perfect. The house is worth around $35k, I owe $70k.
My question is can I walk away from an installment loan? It makes zero sense to stay here. I did inherit a few investments in 2010/11 and could theoretically pay off the house with part of my retirement. But I am unwilling to do that. I would like to have some idea of what to expect, what they can take from me and what they can�t. I am not worried about my credit.