I'm about to lose it. What should I do? Please help!!

[13inOR]

I am not sure if I can give the name, so private message me if you want it.
Anyhow, we had substantial equity so even though the lenders dont usually do more than 80% LTV, it was still more than enough to pay off the trustee and have some extra for a car. Do you have enough equity to pay off the trustee if you only get a loan for 80%?

[STEPH1079]

Oh its ok, I understand. If we decide to go that route, I will send you a private message.
I'm not sure how to figure out what we'd have at a 80% loan. Again - I am a tad slow when it comes to this stuff. I know the basics and that's about it!
Is it based on what your house appraises for?

[13inOR]

yes, so take what your home appraises for, and then 80 or sometimes 70%, depending on the lender, is what you could borrow. Is that enough to pay off your 13?

[STEPH1079]

Ok. So say our house appraises for $200,000. We owe $125,000.
Based on 200k at say.. 70%, we could borrow $140,000. If it was at 80%, we could borrow $160,000. Then I'd have to subtract what we owe on the mortgage?

[13inOR]

exactly, so you may not have quite enough to do it, depending on the fees to refi, etc. But thats how it works. There has to be enough to pay off mortgage and chapter 13 or they wont let you do it.

[MTG_BANKER_OH]

Ok. So say our house appraises for $200,000. We owe $125,000.
Based on 200k at say.. 70%, we could borrow $140,000. If it was at 80%, we could borrow $160,000. Then I'd have to subtract what we owe on the mortgage?

You can go up to 95% of the appriased value on FHA for cash out loan alot of that will depend on credit history before the ch 13. There are lenders that will allow you to go up to 90%-95% on the non-conforming side but you need a credit score over 580 generally. The more equity the better chance you can get your chapter 13 paid off then you have to weigh the difference of your chapter 13 payment that may be done in a few years or a larger payment that will be with you for the next 30 years.

[aa06a47]

You can go up to 95% of the appriased value on FHA for cash out loan alot of that will depend on credit history before the ch 13. There are lenders that will allow you to go up to 90%-95% on the non-conforming side but you need a credit score over 580 generally. The more equity the better chance you can get your chapter 13 paid off then you have to weigh the difference of your chapter 13 payment that may be done in a few years or a larger payment that will be with you for the next 30 years.

Great advice, if you can make your chapter 13 payment, why go into longer term debt to pay it off. Of course, getting out from under the thumbs of the trustee may be worth something...gotta balance it out.

[STEPH1079]

That is true. One other thing we talked about last night was if we refinance now, our interest rate still won't be great. Why refi now, with the possibility of having to refinance again in the future to get a lower rate.
I think we are going to wait it out. Our monthly payments to the Trustee are taken out of my paycheck, and I don't really notice that its gone. There is nothing else I can do but pray the Libor rates don't jump sky high. I found a great website by the way, on Libor rates:http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=141&a=627
Our rate won't go above 11.75 for the first change, then we have 3 more to go until BK is over and we can refinance after we are discharged.
That is our "plan" for now. Stay in the ch13, ride out the increase in mortgage payments and refinance in the summer of 08 when all is said and done. That way if we cash out,we can keep all of the equity!

[anonymuse]

Just note that that is a UK site.

[MTG_BANKER_OH]

That is true. One other thing we talked about last night was if we refinance now, our interest rate still won't be great. Why refi now, with the possibility of having to refinance again in the future to get a lower rate.
I think we are going to wait it out. Our monthly payments to the Trustee are taken out of my paycheck, and I don't really notice that its gone. There is nothing else I can do but pray the Libor rates don't jump sky high. I found a great website by the way, on Libor rates:http://www.bba.org.uk/bba/jsp/polopoly.jsp?d=141&a=627
Our rate won't go above 11.75 for the first change, then we have 3 more to go until BK is over and we can refinance after we are discharged.
That is our "plan" for now. Stay in the ch13, ride out the increase in mortgage payments and refinance in the summer of 08 when all is said and done. That way if we cash out,we can keep all of the equity!

You may have the option to just refinance the mortgage to lower your payment and get a fixed rate through FHA, it depends on your credit history and whether they will approve you. Then it is up to the trustee whether they will approve the refinance and help you lower your mothly payment or just take the extra savings and apply that to the creditors. It may be worth a shot. It seems to me with the mortgage you are on that they may approve your request because your rate is going up every 6 months and the interests rates are just going to keep going up every 6 months. Do you know what your margin is on your loan? Do you know how to calculate your interest rate by checking the libor rates? They way you calculate your rate on your loan is the index(which is the libor index) plus a margin. So if your rate is 11.75 then the index is 5.4 (6 month libor) so your margin is 6.3. Therefore whenever the libor goes up then your interest rate goes up 6.3 + (6 month libor). Whoever put you into this loan shoudl loose their license. A subprime 6 month adjustable is always a bad idea unless you are going to be there a short time or interest rates are going down.

[LostOne0069]

Wait a minute here... I haven't read every word of every post in this thread... but all I see on scanning them is people talking about refinancing.

What about modifying your Ch 13 plan?

I mean, secured debt is priority debt. If your interest rate goes up, so does your payment.

Can't you just LET it go up, then submit a modified plan to the trustee showing the new payment... which would lower the amount paid to your unsecured creditors but why should YOU care about that?

Am I missing something as to why this can't happen or why it would be a bad idea?

[SinkingFast]

They're within 2 years of completing a 100% payback plan. AND their interest rates on the mortgage are jumping. That's why everyone is talking about refinancing.

Plan ammendment has been mentioned earlier. But it's the mortgage it's self that's so horrible. So if they could refi, lock in a lower rate, AND pay off the Ch 13 plan, then that's what they were thinking they might do.

[anonymuse]

They're within 2 years of completing a 100% payback plan. AND their interest rates on the mortgage are jumping. That's why everyone is talking about refinancing.

Plan ammendment has been mentioned earlier. But it's the mortgage it's self that's so horrible. So if they could refi, lock in a lower rate, AND pay off the Ch 13 plan, then that's what they were thinking they might do.

At least they might have three options:

- Refinance and payoff plan
- Refinance only
- Refinance and modify plan

[LostOne0069]

They're within 2 years of completing a 100% payback plan. AND their interest rates on the mortgage are jumping. That's why everyone is talking about refinancing.

Plan ammendment has been mentioned earlier. But it's the mortgage it's self that's so horrible. So if they could refi, lock in a lower rate, AND pay off the Ch 13 plan, then that's what they were thinking they might do.

Well, if they can pay off the bk then great... but if not, then I guess I don't see any down side to getting the plan modified so that their actual "payments" stay the same... (even if the mortgage becomes a bigger percentage of the total). Hell, they'll even have a bigger tax writeoff at the end of the year, so it could end up a net savings!

Then, once the bk is done with, refi without worrying about the trustee.

[STEPH1079]

I am very tentative to modify our plan. We pay a low amount and its only for 2 more years. I don't want to drag it out to five.
Our credit scores weren't great to begin with, so I don't think we will get that good of a rate if we refinanced.

It is a UK site, but it gives the US Libor rates as well.