Until 3 years ago when I moved into a new home, my credit score was consistently around 780. Since a divorce,
illness, and the move, I had no choice but to file bankruptcy last year, which still weighs heavily on me emotionally. I am maintaining my home with a 30 yr fixed loan for $188,000 at 5.5% and a home equity of about $98,000 that varies. I have never been late on either payment, which amounts to about $2200 a month out of about $3700 take home pay, not including a $165 association fee and all the other necessities of home ownership. While I am thankful to have a good job, I worry that an unexpected crisis would be the last straw. I have asked my lenders for assistance, but to date have not received any. I love my home and do not wish to leave or foreclose, but am not sure what to do. Properties in my area are selling way below the $310,000 that they were appraised at before the economic crisis, if at all. I am quite capable of paying my mortgage, however I am now in negative equity (owing about $286,000 on a home where similar uni
Hi Rachel,
Sounds like your life has been in a bit of an upheaval in the last couple of months. It sounds like you are doing the best you can under the circumstances, and it is great that you are thinking about the future! First - you have a great rate on a 30 year loan and as the home equity loan is variable that should be the first thing you try to buy down when you have the opportunity. I am not a mortgage lender, nor a banker but common sense suggests the following:
Look at your other credit areas. Are you maxed out on all of your cards. Do you have a car that you are paying monthly on also? Where is your monthly check going beside home expenditures and taxes? I
Can you rent out a portion of your home to provide income?
I would not think about a short sale unless it is absolutely necessary as it does not help your credit rating in the future.
First of all, it would be extremely difficult, if not impossible, to get a mortgage for 2-3 years after a bankruptcy. Selling now would probably not be profitable. If you don't need to move and you love the place in which you live; why sell? You have $98,000 built in equity. 5.5% interest rate is not bad--especially after a bankruptcy. My suggestion is to stay put. Take out some catastrophe insurance to cover your bills in case of unexpected crisis and stay put. Keep paying the mortgage down so that when you are ready to sell you can come out ahead. And, whatever you do, do not ever take on a second mortgage or pull equity out of this home.
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