How inappropriate loans can lead to bankruptcy
Jessica White/DC Columnist
Issue date: 11/30/08 Section: Business
You are in a difficult situation. You have a "jumbo" loan (over $417,000); you financed the closing costs so you may owe more than the property is worth; you no longer have any "reserves" for a refinance application; and you would have to state your income (and your assets). And since you have no money to pay for the costs of refinancing, you would have to hope that your home has increased in value so you can use the equity to pay for the refinance.
Assuming it is even possible to refinance, how much good can it do? If you lowered your payment to 8%, the monthly payment would be onikly $432 less per month, less than your monthly tax bill of $500. You would now be spending 67% of your income on your principle, interest, taxes and insurance. Will that help you keep your house? I do not see how that will make a substantial difference in your financial situation.
You told me on the phone that your lender knew your true salary. While I think the lender deserves a lot of blame, you are the one who signed the loan documents with what I can only assume was a completely fictional income, and you are the one left holding this bag, while you can, anyway.
Next week, I will outline some alternatives to you. Best of luck,
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage consultant with Tenacity Mortgage, a division of Tenacity Group, the Capital Region's leading financing, real estate advisory and tenant condominium-conversion company. Call her with your questions at (202) 607-4449 or email her at Jessica@msmortgagemaven.com. You can also apply online at www.msmortgagemaven.com.
Assuming it is even possible to refinance, how much good can it do? If you lowered your payment to 8%, the monthly payment would be onikly $432 less per month, less than your monthly tax bill of $500. You would now be spending 67% of your income on your principle, interest, taxes and insurance. Will that help you keep your house? I do not see how that will make a substantial difference in your financial situation.
You told me on the phone that your lender knew your true salary. While I think the lender deserves a lot of blame, you are the one who signed the loan documents with what I can only assume was a completely fictional income, and you are the one left holding this bag, while you can, anyway.
Next week, I will outline some alternatives to you. Best of luck,
Jessica White, also known as "Ms. Mortgage Maven," is a mortgage consultant with Tenacity Mortgage, a division of Tenacity Group, the Capital Region's leading financing, real estate advisory and tenant condominium-conversion company. Call her with your questions at (202) 607-4449 or email her at Jessica@msmortgagemaven.com. You can also apply online at www.msmortgagemaven.com.
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