Reaffirmation Questions

[msmith32]

I am strongly considering filing for Ch. 7 bankrupcy soon. I do not plan on re-affirming on my mortgage, but am going to remain current and continue to live there. I have a few questions.

1) Will my mortgage company send me a 1098 form showing the interest paid during the year and can I still deduct the interest on my taxes?
2) Should I pay my property taxes/insurance on my own and not include them in my monthly mortagage payments as I have been doing, or do I continue to pay the same amount and have an escrow account?
3) Do I need to have homeowners insurance since I am no longer liable for the property? Or do I really only need renter's insurance for my personal stuff.
4) Do I still need to pay PMI? If yes, can and/or will that be cancelled anywhere down the road?

Thanks for the help!

[debee]

If you want to stay in the house:


1.) yes

2.) if escrow was a condition of your original loan docs, keep it. if it's optional and you want out, make that arrangement with your lender.

3.) yes - if you drop the homeowner's insurance, you will be in default. (renter's is an option when you expect/want foreclosure, have stopped paying the mortgage, have an expired homeowner's policy, have a lender-placed policy that doesn't cover your stuff, etc)

4.) yes - if you don't make the entire payment expected, you will be in default.

[tcreegan]

Hi msmith, Hi debee,

debee has you covered, the only thing I would add is that you might have a homeowners policy being paid out of the escrow. And while you are checking to see if you have a policy being paid from escrow, check to see what it covers. As debee said, it might not cover your belongings, just the house itself.

Hope this helps,

Tom in Colo