over a barrel

[marco59]

My wife and I bought our first home three years ago. We were both in our 40s.
Better late than never. We bought a pre-built home and put it on ten acres of raw desert land. We invested 1000s of dollars in a well and quite a bit of site preparation. We live in a very economically depressed area where it seems like most of the homes are mobile homes, or those made of cinder block and adobe. We also live in a very isolated area.

We were pre-approved by a mortgage company....got a good rate...and a local bank gave us a loan for the house and site prep. BUT....the house appraised about $30,000 less than what the bank loan was for. We had a 5 point something rate with the mortgage company, who now didn't want to touch us. The bank really had no choice and offered 7 percent. We didn't have much of a choice and went with the bank for 20 years.

Of course, we have no equity in the house. Taxes are less painful, and the house is what I want. We are going to stay here until I retire...about 17 years from now. The loan with the bank matures every three years. Again, we didn't have much of a choice in 2004. Now they tell me that their loans are usually 1-2 percent over prime. Now, it looks like 8.75 percent.

The bank has been great. The extra payment is not going to be a great hardship, but I wonder if anyone knows of any other options I could pursue. To me, it seems like the bank has me over a barrel. But on the other hand, they would be stuck with a property that they could not sell for what they loaned me. As I said before, I hate the extra money, but it looks like I'll have to pay it. Do you agree?

 

[Frixxxx]

I'd shop for a new loan. It doesn't need to be a bank. I would see what options were available to you. Good credit=good interest. Because of the depressed market you may need to consolidate some of your savings to make a new loan work. However, if the penalties outway what you might save in this fashion. it may be worth it to wait until the property market turns. Tough Choice my friend!

 

[Minnow]

Marco,

Once again, Frixxxx is quicker than me with the advice. You seem to be well educated on your own personal situation, so I will just refer a site that has some pretty good calculators and a decent amount of specific advice for many situations homeowners find themselves in.

It's: www.mtgprofessor.com

The guy writes for Yahoo and whether or not you agree with what he has to say, his calculators have helped me out more than once.

 

[marco59]

Thanks for the quick responses! We went ahead and went back to the bank and renewed the loan for three more years. The interest was slightly lower than what they first told me and our payment went up about $70 a month. However, they paid closing costs and we went ahead and got the property appraised again yesterday. The bank wants to see if they can get a mortgage company to bite. Maybe they want to get rid of us.:suspicious:

 

[Frixxxx]

Marco,

Once again, Frixxxx is quicker than me with the advice.

It's: www.mtgprofessor.com

The guy writes for Yahoo and whether or not you agree with what he has to say, his calculators have helped me out more than once.

I may be quicker but your post was more informative! Nice site.

 

[Minnow]

Thanks for the quick responses! We went ahead and went back to the bank and renewed the loan for three more years. The interest was slightly lower than what they first told me and our payment went up about $70 a month. However, they paid closing costs and we went ahead and got the property appraised again yesterday. The bank wants to see if they can get a mortgage company to bite. Maybe they want to get rid of us.:suspicious:

Good for you and yours .... and you CAN still shop around for better terms and rates. It's just excruciatingly boring and tedious but then again, you gotta pay for that roof over your head, so why not pay in terms a little more acceptable to YOU. Nowadays most banks don't want your house (for the most part) and I was gonna suggest getting the house appraised one more time by YOUR independent appraiser.

Frixxxx, it is a pretty dry read but I would recommend it to all homeowners/buyers that have an attention span and a willingness to arm themselves before sitting down with a lending representative.