If you actually ARE capable of paying the thing off, and you can convince
a relative or friend of that fact, then you ought to be able to get a private
loan in the 6% or 7% range. Or you can find something else to use a
and take out a loan against that. Or you could let the lender(s) have the
house and come out ahead.
They do it all the time. In recent years the banks have been working
overtime on refinancings. They do it because if they don't, they fear
you will go elsewhere.
This OP's problem is that he apparently took out a second loan and now
has a combined indebtedness in excess of his collateral. I've always
been leery of those "lenders" that will lend more than the value of the
collateral; I doubt you will find a legitimate lender that will make
such a loan. Those who do are charging well above market rates, and
hoping that you don't default until inflation has driven up the value of
the collateral and your payments on you first loan have reduced the
principal a bit.
I would think the only solution here would be to find a legitimate debt
counseling service and see if they can straighten out the mess.
SPAMBLOCK NOTICE! To reply to me, delete the h from apkh.net, if it is
It's not clear to me that there is any advantage to refinancing. You
have a high risk loan on a house with a mortgage balance that exceeds
the value of the home. The interest rates on these are high and
don't fluctuate as much with long term interest rates as a regular
home mortgage would. Even if you could refinance it, the rate may not
be much different.
If you want advice, it would help if you gave us all the info as right
now, we really don't know how many loans you have, which are secured,
what the rates are, etc.
If your first mortgage has little or no equity, there's no way a bank
will refinance into a note that has a greater value than the
collateral (your house). You are wasting your time trying to do such a
thing. That leaves you with the companies that handle high-risk loans.
Even they have their limits. You need to look at how much of the
payment load you can continue to handle and make a decision about
which losses to cut. With little equity to work with you are not in a
position to bargain.
Yes.. Surely they can, but they probably arent going to.
Lets say your the one with 100k (i made that figure up) to lend. You
can either lend it to Joe who wants to buy 130k house and pay 30k down
or you can loan it to Brian who has a 70k house and wants to borrow
100k. Who would you loan it to? At what interest rate.
If you choose Joe the most probable worst case scenario is Joe goes
broke and you get a 130k house that you need to turn around and sell
for 100k. Joe isn't as likely to let the house be foreclosed because
he doesn't want to loose his 30k initial investment.
If you choose Brian probable worst case scenario is that Brian goes
broke and you get a 70k house with 100k loan on the books. Your going
to take a loss selling the place and Brian is more likely to let the
house go because he has no option to sell it as it isn't worth near
what he owes.
Most lending institutions don't keep the loans anymore. They set you
up with a mortgage and sell them off to one of the big boys withing
the first couple of months. The big boys don't want high risk loans
and if you cook the books so they get stuck with the high risk loans
they will quit buying your loans alltogether leaving you out of
business. The ones that are willing to write these loans are able to
do so because they charge higher interest rates to make up for the
additional foreclosures and overall headaches these loans cause the
I realize you have good credit. Good credit is probably why they gave
you the over value loan in the first place but even with good credit
you can't borrow 40k to buy a 20k Toyota AND get the same interest
rate as the guy who wants to borrow 15k to buy a 20k Toyota.
I wish you well in trying to get this issue resolved. Your best bet
may be to start paying additional principal on the loan. Once you get
down to a 90% debt to value you can get a standard mortgage with PMI
and a decent interest rate.
It comes down to this. Are high risk lenders in today's environment
making loans at substantially less than 12.9% to folks in similar
situations? If the answer is yes, which I doubt, then maybe you can
find someone to refinance it. I tend to doubt it because with no
equity, your 2nd mortgage is very similar to an unsecured consumer
loan. The only advantage the 2nd mortgage has for the holder is they
can foreclose and force you out of your home, but it will only cost
them legal fees to do that, with no return from the sale of the house.
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