dgetzkow asked:
I have 3 rental homes and now the variable rate interest went up to 13%. I can’t make it work to rent them out and pay taxes and insurance. Not to mention repairs, etc. I know my credit is horrible. I couldn’t pay the credit cards a year ago and went into default with them. I want to refinance these home mortgages or I’ll have to default on them.
My credit is already shot and what would happen if I just let them go back to the lender?
MITCH
I have 3 rental homes and now the variable rate interest went up to 13%. I can’t make it work to rent them out and pay taxes and insurance. Not to mention repairs, etc. I know my credit is horrible. I couldn’t pay the credit cards a year ago and went into default with them. I want to refinance these home mortgages or I’ll have to default on them.
My credit is already shot and what would happen if I just let them go back to the lender?
MITCH
REGGIE
Yikes! What are you doing with 3 rental homes and rotten credit? Don’t let your credit get any worse! Sell them rather than go through foreclosure! Hopefully, you’re not going negative on your monthly payments.
Right now is not the best time to refi investment property if you have crappy credit. Contact a good, honest loan consultant and get an opinion or two.
Otherwise, sell rather that go through foreclosure!
Comment by KConsults — September 10, 2008 @ 12:54 am
KRISTOPHER
You took out variable rate loans on investment property???
You were in a high risk situation when you took out the loans and it is only worse now. If you are behind on your credit cards then it is highly likely that you will not be able to refinance any of those lones. Most lenders might be sympathetic if it were your primary house but being investment property, and given the market conditions for sub-prime mortgages now, there probably isn’t much to do. If you let them go back to the lender, they will sell them on the open market and then sue you for the balance (if any) of the outstanding loan. You signed the paperwork for a certain amount and that lender will get that amount one way or another.
I see your options as follows:
1. Sell the houses for enough (more if possible) to cover the outstanding loan balances. This is the best option as it gets you out of the mortgages completely and you have no remaining obligation for them.
2. Find investors to help you through this patch. Maybe someone who will help you refinance in return for a portion of the monthly rental income if you continue to manage the properties. Not the best option because anyone willing to do so is going to want the majority of the monthly rents.
3. File bankruptcy. If you do, go for Chapter 7 and flush away as much debt (including those credit cards that are still out there) as you can. Don’t let anyone get a judgment against you or you will never be able to get out from under that. Best to consult an attorney for this option since all aspects of your financial status will need to be explored in detail to determine exactly how you can file and what you can keep.
Comment by troythom — September 12, 2008 @ 1:21 pm
WINSTON
Though refinancing your home loan to get extra cash and pay off your credit card debt might be a good idea. It is not the best solution. This serves best the credit card interests and not yours. Because even if you get your debt settled and eliminate it for good, if you don’t change the way you spend, you’ll keep accumulating debt once again and maybe next time you won’t be able to resort to your home equity. Read more about it at:!
Comment by farran abat — September 14, 2008 @ 8:50 pm
RORY
Hopefully you still have some time to refinance and not make your credit worse by defaulting. Juggling three rental properties with a negative cash flow is not an envious situation.
I suggest you refinance to reduce your mortgage payments for now. After that consider what you want to do with the properties long term, perhaps you may want to sell them or hold on to the one that has a good probablility of generating positive cash flow in the future. Good luck!
Comment by pioneerlendersmod — September 16, 2008 @ 8:05 pm
RIGOBERTO
Comment by aman_amanji — September 19, 2008 @ 2:19 am