Housing Crunched?

Question

I have a 5/1 ARM I/O blended with a prime rate second. I live in high priced CA and I got in 4 yrs ago. hardly soon enough. My value has dropped to just what I paid for it and I have one year left on my ARM. My total Loan is 565K and my home appraises for about the same. I am unable to get any of these cool subsidized loans because my LTV is low. I could refinance if I could come up with 50K and get to a 97% LTV but I am reluctant to stay in a house that is too small for my needs in the future (kids are growing and had to move my mother in with us - she is elderly). Any advise would be helpful. I could refiance and afford the 3.2K monthly payment, but I am not sure I want to pay this much for too small of a house. I could sell and take a hit of maybe 20-40K l**k my wounds and move on. I have excellent credit and make 150K per year. Any suggestions would be appreciated.

Answer 1

I am not an expert like bbwebpup but I can understand what you are going through. These days, home values drop while more and more people are losing their homes due to foreclosure. I really want to help you out but my knowledge in the housing market is limited however, i can share with you a website that helped me out a lot whenever i had some questions about the housing market. You might wanna try www.new.housingassistancenetwork.com or www.mortgages-for-everyone.com.

Hope you get the answers you need.

Answer 2

I'm a little confused by the numbers in your post.

If you owe $565K and wanted to refi w/3% down (I assume an FHA rate/term refi) you'd only have to come up with $17K.  At a rate of 6% you'd have a $4.2K mo pmt. including taxes/ins/MI (You might have to buy the 6% rate too, figure $5,500 extra costs).  I don't know where you're getting $50K?  Could you get a $4200/mo rent for the place if you decided to move out?

If you sold, you could figure at the most a 6% seller fee to the realtor of $34K if you sold for the appraised value.  I understand some places in Silicon Valley can be expected to deliver asking price.

I think you have to know what your cost would be for a home more appropriate for your family's needs.  Also remember that because of this credit crunch, even folks with great credit probably can't finance more than 90%, I think I can go to 95% until Aug.), so if you were going to buy a $650K house you would have to come up with $65K after the losses on the house you're in now.  And hopefully that $150K income is on a W-2 as options for stated income have gotten difficult, it's still possible to do for now.  The lawmakers are trying to make stated income illegal though.

I think once you can really digest the numbers you're facing, you can figure out what to do.  Feel free to contact me if you have additional questions regarding your options.