Foreclosure in Phoenix>Question Details

Martin, Home Seller in Phoenix, AZ

I purchased a home in the summer of 2006 in South West Phoenix. I currently have a interest only loan.

Asked by Martin, Phoenix, AZ Sat Oct 6, 2007

I would like to get out of it into a 30 year fixed loan. With the property value decline in the area are there any options other than coming up with a big payment to cover the difference in the appraised value verse the loan value? Is it worth keeping the home or would it be better to walk away from the home, and take the credit score hit?

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If you have a 30 year fixed interest only loan at a good rate you do what I do and pay extra towards the principal every month. I expect you may have 100% financing and find yourself owing more than your home is worth. If so look at the advantages of the home and homeownership and talk with a financial advisor.
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0 votes Thank Flag Link Sun Oct 7, 2007
Martin,
I agree with Pam. Sit down with a financial advisor and talk about your specific situation. Also, while you may be upside down on your loan, you want to find out for sure. I would be happy to do a Comparative Market Analysis for you. This will tell us about what your home may sell for in todays market. With this information in hand and an idea of what your options are you can make a good decision that you won't regret. A major hit to your credit score may cost you more than you think.
Anna
0 votes Thank Flag Link Wed Nov 21, 2007
Martin,

From the time and location of your home purchase you likely owe more than the home is worth. If making the payment is becoming increasingly difficult, speak to your bank about options you may have. Consider a short sale to less the credit score hit. Walking away from a home i.e. letting it go into a foreclosure should be the last possible option.
0 votes Thank Flag Link Mon Nov 19, 2007
I would never walk away from a home. You credit will be trashed for a long time. In regards to your mortgage, why don't you just make the extra payment with your interest only payment. You can do this with no penalty. Pay it just like a 30 year.
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0 votes Thank Flag Link Mon Nov 19, 2007
If the interest rate is comfortable can you start making payments on the principal and weather the storm. How long have you had your interest only loan and is it near the point where it gets reamortized?

If the home is comfortable for you and you are able to make the payments I wouln't walk. Prices go up and prices go down, and again they will go up.

I would sit down with your financial person to see exactly where you stand. In order to guide you here more information would be needed.
0 votes Thank Flag Link Sat Oct 6, 2007
Pam Winterba…, Real Estate Pro in Danville, VA
MVP'08
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