Refinance Your Loan with the damn bank or lender...or whoever the f it is.
I think you have the (excuse me) balls to do this. And it works.
But WTH you can't lose.
Banks right now, and lenders, DO NOT want any more property. They can't handle it.
You walk in, get past the desk people and say you need to talk to someone with authority. Cry and tell them you are about to let the bank have your f-n house if they don't sit down and do some dickerin with you.
Take a picture of your home, tell them your ready to leave it with them and start all over.
Tell them you want some relief from this f-n mistake, that your upside down 70k or whatever and have to have some interest relief. Tell them your husband is against it, but you will leave him too. (This is a lie)
Walk in with a foreclosure sign, leave the picture with your phone number on the desk of the person you are talking to, and tell them you did not come to debate, you came to share your desperation and get some relief one way or another.
I gurantee you he will call you on your cell phone before you get home and say..let's talk. We don''t want your house.
(The further under water you are, the better it is for your bargaining power.)
Ummm yeah the flaw in your logic is that to do something crazy drastic i'd have to miss at least a single home payment...which I will never do.
And it's not like Countrywide doesn't have my income statements...we CAN afford our payments.
I also dont' want to get stuck in another crappy loan situation, which is exactly what people with bad credit (i.e. missed home payments) and foreclosures are getting in order to keep their homes and loans.
I have good credit.
I can afford my home...now...
My adjustable rate expires beginning 2010.
If i didn't have an interest-only loan i'd still be stuck paying principal, so that's what i'm doing now.
I'm not going to see if they'll call my bluff if I start missing payments (which would be necessary in your scenario for them to believe i'm in dire straits), scream i'm going to foreclose, then force them to give me another bizarro loan created only because of this crazy market.
People just need to hurry up and foreclose, so that other people can buy crazy cheap, and then things will even out. It's this slow awful death that's ruining things.
I'm not upside down in anything yet...i'm not selling, i'm just hoping to make it easier to refinance.
I would sooner beg my aging parents for money AND my mother in law before I ever miss a home payment.
I posted this here instead of in the comments section 'cause I started to write so much I figured it deserved a blog entry :)
8 comments:
Well, I mis-read your financial situation, and I'm glad to know your not upside down here.
As always, your logical.
And totally right on...NEVER miss a house payment. N...E...V...E...R.
Being newer to this whole home ownership myself, the last thing I want to do is miss a mortgage payment.
I've been reading a book about payment cards and credit cards and way back credit cards were only given to people that were well off then someone thought that it would be a good idea to give people of lower incomes credit cards not because they would pay their bills but because they would maintain a revolving credit balance and they'd be able to make a fortune off of those. Computers became a bit more popular and they wrote some software to assign people a credit score. Anyhow they figured that even with a few people they'd have to 'right off' there would be a majority that would be able to maintain their payments but never completely pay off their balance or it would take awhile.
Anyhow, point is we're seeing the same thing now with the housing market, the banks figured to spur the housing market more they'd offer sub-prime mortgages because they wanted more people no matter the level of income to buy homes. Sure it worked out for those of us that can afford it but we're now seeing the result of what happens when a large number of people can't make those payments.
It will correct itself and somewhere someone is getting rich on this but it's not any of those that over-extended themselves.
I'm not the brightest with my credit card but I know it's a privilege and not a right. Although it can provide you a better living standard, it's only temporary because you have to pay the credit card company or bank back at some point. People seem to forget that, maybe it's because of the population difference between Canada and the U.S but we seem to be a bit more mindful of our credit, we're not perfect by any means but credit issues, bankruptcies, foreclosures seem a lot more frequent in the U.S. Why?
Are the homes over-valued there?
"credit issues, bankruptcies, foreclosures seem a lot more frequent in the U.S. Why?"
Reason #1: Canada still regulates the finance industry under the Eisenhower-Talmadge rules that guided the U.S. from 1947-1991.
Bad credit score, no credit.
Reason #2: Canada still regulates loan sharks and hold's lenders to 3.5% above prime lending rates. In America, you can get hooked into 19% loans, 21% loans...and without truth in lending statements, you can offer no paymnent options to poor, uneducated folks, and end up with a Flat Screen T.V. that cost $1,600 having a total payout of 6,450.00 within 3 years.
Reason #3: The SEC allowed prime and sub-prime lenders to "invest" up to 50% of their debt derived cash into financial derivatives...think stock market trading, commodity trading, etc. In other words, they gambled with your money to make more money in a bull market. When the market fell they lost their cash positions as a company and had to squeeze their lendees.
4. The sudden appearance of a generation that would just "walk away" from a bad loan and declare bankruptcy caught all lenders off guard and set off a credit crisis.
That is why bankruptcy rules were tightened in 2006.
5. Second mortgages boomed in the U.S. as baby boomers, took equity out of their homes to buy mountain and seaside properties...that is, they took out a second mortgate to get ANOTHER mortgage on retirement property. The boom the occurred caused rampant inflation in CA, FLA and Appalachia housing properties. The bubble finally burst when folks started buying properties to flip them.
In Sea Side Plantation in Florida, a 1,600 sq ft beach front cottage saw these stunning increments in "value":
1986: 135,000 dollars
1996: 350,000 dollars
2006: $1,500,000.00 dollars
One bedroomn Condo's were being sold, pre-build for $150,000 with the expectation of re-sale upon full build at $350,000. In other words, double your money in 12 months. This was the first bubble to burst.
That's interesting but store cards in Canada can have interest rates well above prime, 19% isn't unusual, I think the store credit I got from the furniture store in order to furnish my place was at at least 20%, sure no payments for 6 months or equal payments for 12 months with that interest rate.
There are plenty of people here that go off and get store credit to live beyond their means. I think the rules have to tighten even more to protect people from themselves and of course the share holders of the companies that lend out money, although Visa and MasterCard are not publicly traded companies a lot of the banks that are members do have shareholders to answer to.
I think you'll see the SEC make some changes to how people invest their debt. At least I hope they do. Or is this some way for the U.S economy to knock those nations that are doing well down a few notches to level the playing field a bit??
Canada seems to be ok for now but a few banks have bulked up their cash reserves just in case.
Were baby boomers taking out second mortgages or were they selling their old places and down-sizing.
Here in Ottawa we've seen a lot of baby boomers downsize their homes and either move out to smaller country homes or move to urban condos. Ottawa over the last year has had a healthy condo market and the resale market has still been surprizingly healthy. The suburbs seem to be spreading out, like a weed in every area of the city and for some reason they have low property taxes compared to those that live in urban areas, something I'm trying to familiarize myself with now.
I heard someone say a long time ago that investing in a home one never loses money but the market has to correct itself at some point. I wonder what sort of correction we'd see.
http://biz.yahoo.com/bizwk/080207/feb2008db2008026105146.html?.v=1&.pf=banking-budgeting
Thanks, Zabber.
This link above will cue you to some credit card tricks I HOPE are not happening in Canada.
Thanks for catching me up on finance in Canada. Sorry to hear you caught up with us in high interest rates.
Investing to never lose money.
Zabber, there is really only one rule about credit and investment.
The only time you should borrow money, is on investments that increase in value: houses, land, etc.
Never borrow money on things that depreciate in value: (cars, furniture, appliances, etc.) for you lose twice: on interest and depreciation. In the end, you end up with rust.
Never borrow money on things that depreciate in value: (cars, furniture, appliances, etc.) for you lose twice: on interest and depreciation. In the end, you end up with rust.
Very true!
Interest rates aren't too bad right now, I locked in below 5% when I got my mortgage and I know rates went up a bit but I think they are still better than you folks in the U.S. :)
Rates moved because of our dollar and will likely move down again in order to de-value our dollar a bit.
Being that this is my first true asset it has been a bit daunting, there's a lot to think about. I laughed when I rented at people griping about property taxes, now I'm one of those people. :P
Furniture rusts??? :P
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