Me Myself N My Mortgage Theories

Are you looking for a refinance to help you pay down your mortgage? Before you refinance, read the story below…

Vicki Miller purchased a home in PA with a traditional mortgage from the local savings and loan association. 7 years later, her debt has more than doubled and the lender has threatened foreclosure as she is already behind on the loan. Miller received offers to refinance or take out a second mortgage but she didn’t understand what the lender actually meant.

Miller was earning $26,000 a year and move into her mother’s house in 2001. The house needed repairs and so Miller piled up debts worth 15000 in credit cards and other loans by 2004. She sought financial help and received phone calls from Ameriquest Mortgage Co. of Orange, a big subprime lender which had collapsed since then. The sakes agent then suggested that Miller could repay her debt by refinancing her mortgage and cashing out on home equity.

Meanwhile Miller’s sister was going through a severe health crisis as a result of which Miller couldn’t think of anything else other than her treatment. So, hastily she said yes to the refinancing as proposed by Ameriquest, without even reading the fine print. Miller did get extra cash from the refinance but her monthly payments nearly doubled to $559.

A few months later, another man approached Miller with a second mortgage offer and she accepted it with the intention to spend some more cash on energy efficient windows. Meanwhile her mortgage has been sold off to Countrywide Financial corp. and every payment notice suggested she think about refinance to lower her payments.

Miller didn’t proceed for a refinance again but one fine morning she found a notary with the refinance papers at her door. She felt the documents didn’t look similar to the one she’s had before but the notary assured her that in case of any error, Countrywide would correct it. Miller trusted the notary and signed on the documents but little did she know that she was asking the wrong decision. Her payments went up to more than $700 thereby exceeding her monthly take home pay.

Gradually Miller fell behind again! Now that she’s 3 months in arrears, Countrywide has offered her a loan modification which is expected to raise her monthly payments to $1165. And, every time she gets a mortgage notice, it mentions that if she’s in need of cash, refinancing could be her best option.

So, if you’re unable to carry on with the payments, and looking to refinance, check out the loan docs and see what they say about the loan contract. Try to avoid the refinance mistakes most people do. Also, in case you’re just not able to afford the payments anymore, check out some loss mitigation options with your lender. Know more on Loss Mitigation before you proceed.

Source of the story: http://www.latimes.com/business/la-fi-refi5-2008jul05,0,7891725.story?page=2

Technorati Tags: refinance mistakes, loss mitigation

This entry was posted on Friday, July 11th, 2008 at 4:38 am and is filed under Mortgage. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.