This has been on our mind for a while. Here is our situation:
We paid $490k for the house in 2006. It is now worth (via Zillow) approx $350k. Combined on the two loans we owe $430k.
First loan: $370k remaining (private bank lender) (6.25% / will adjust in 2011)
Second loan: $60k remaining (via citi-mortgage) (8.35% 30 yr fixed)
We both have excellent credit scores (probably over 800 each).
We also have a nice savings we dont want to lose/waste.
We love our house and location and would like to keep it.
Husband just put $10k into fixing up the house (remodelling the bathroom, insluation in walls & updating all electrical in our 100 yr old house). I was gone and he did it as a surpise for me. It is beautiful now and I can run the blow dryer without the power tripping off! But Im not so sure it was the best thing to do in this economy.
In 2006 we did a lot of research before buying our house. Consumer Reports as well as other places online recommended getting a loan directly with a bank, and the more local the bank the better. That way if we had any future problems, they would be more willing to work with us on the loan. Without dropping the bank name, it is a bank lender in the Inland Empire (of southern california). Trying to stay anonymous here
so the bank doesnt search on us. Anyways, so far they have been unwilling to work with us.
We are a fairly young two income family. I met my husband at work in a small business. Our hours have been cut... first from 10+ hours of overtime for both of us, now we get none of that and now both of our hours have been cut to 35 hrs each per week. My husband is important to the company, so I will probably be the next person laid off and his job is safe.
Checking the Fannie and Freddie websites, it appears our loan is not secured by them, I guess becuase we went through a private lender bank. The only time we really contacted our bank, a year ago (mid 2008), they were not willing to work with us. I had called our loan agent directly who did the loan for us. He is sort of a middle man with a local office near us (we dont live in the IE and are west of it). Our loan guy told us to come back in 2011 when we feel the pain of the loan switch.
This guy is the lender, he is not a broker. We went to several banks until we got the best deal we could (we put 5% down). We settled on this bank becuase it was basically local in case we had problems. It was also the best loan we could get at the time and he specifically told us to refinance before 2011 came up and refinancing would not be a problem and his bank would do it all for free too. No refinancing fees. We grilled him if refinancing would be a problem before 2011 and he said not a problem. Come in anytime. Now, they dont want to talk to us.
Even just a refinance to lock in a lower rate (fixed hopefully!) would probably work if both of us keep our jobs and our hours dont get cut anymore. Im afraid I will lose my job soon, which is going to screw things up for us and would mean we would have to start going through our savings to make our mortgage payments.
We are very thrifty so there is not much to cut out for us. Electric bill is like $15/mo, water same thing. We dont have cell phones and our home phone is online (VOIP) for only $15 a month. We dont have cable, we have no credit cards, we own our cars, etc. Heck, we arent having kids now becuase we are scared about the house and the economy! It is really stressful. I was taking classes for my CPA at a state university and becuase of the price increases, I had to take a break this semester.
So... thats about where we are at. Not sure what to do. Try to refinance and put our savings somehow into a refinance? Or try to go for a loan modification? That would REALLY help us out and make life a lot easier. We are having problems now with no overtime, less hours at work, etc.
Any advice would really help us out. Many Thanks!
-Jasmine
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