First of all, I am so glad I found this forum. It has lots of helpful information for most home owners to benefit from.
I seek the reader’s advice and I appreciate everyone’s response in advance. God bless you.
Here is my situation,
My wife, our 2 kids and I live in a house in California that we purchased back in March 2006 for 700K . We have two mortgages on the house:
1st mortgage: with Citi Mortgage
30 years fixed
Interest Rate: 6.25%
Principal Balance: ~$403K
Monthly Payment: $2567.54
2nd mortgage: with Flagstar
30 years fixed (15 Baloon I think that means I have to refinance it after 15 years or something like that)
Interest Rate: 7.25%
Principal Balance: ~$206K
Monthly Payment: $1452.36
In Summary: loan amount of both mortgages is 609K and our monthly payment is $4020/month mortgage + Property tax (~$750/month) + insurance ($70/month) = $4790/month.
The house today will appraise for ~470K. We both employed and are current on our payments with excellent credit score status. Even though we currently have a steady combined gross income of ~130K/year (or $10800/month), we are currently struggling to make payments. Because after our payroll deductions (taxes, healthcare & Retirement) we are not left with enough money to pay for our mortgage and cover all these other expenses such as daily expenses, utilities, child daycare for our 2 boys, etc… We are running out of our savings and will not be able to continue paying. I am sure that lots of families nowadays are in our situation or worse.
Our Goal: My goal is to try to keep my home and not foreclose on the house. It would be good if we can refinance our both mortgages into a 1 fixed loan with a lower interest rate and of course a lower monthly payment. If we can get a loan amount reduction that would be great, but I doubt that will happen. The main problem is that no bank will refinance our home today because we are upside down on our mortgages. The house is worth $470K and we owe $609K.
The Question: What we need is an advice on if we should contact both mortgage companies and request a loan modification? Or is it because we are current and both employed, and there has been no change to our income status, we should not even bother? Is foreclosure the better option? Should we stop making mortgage payments and then contact our mortgage companies?
Also, is the Obama initiative that was announced on Wednesday going to help in our situation? Please advise me and help me understand.
Thank you again for helping.