Stay and Pay question

[RNmomtofour]

Ok, so if we do the stay and pay option, are we basically just renting or are our payments actually reducing our loan and creating equity in our home. We plan on staying in our home 15-20 more years and we are concerned if we are still owners and what happens down the road when we do sell? Would we even make a profit? We really want to reaffirm the mortgage since we have a fixed 2% rate. We owe more than it's worth, but by the time we sell down the road, that won't be the case. Our lawyer is so angry when we even mention reaffirming and said no judge would grant that so she won't sign off on it????

[keepsmiling]

YES, you will grow equity and it's yours to keep- assuming, of course, the market rises.
Everything should be just as it would have otherwise, except for your obligation. No worries.
Fixed 2%!!! NICE.

[tobee43]

wow!! 2% unreal!!!! you are so very lucky. i'm certain your property will begin to rise in value again slowly. we most likely will never see the inflated amounts of years past. i see it here, our home increased in equity substantially, homes are being to sell 50k more than this time last year.

plus here is the bottom line. i wish people would not always be as concerned about building equity as much as maintaining what they have. frankly, since we plan on staying here forever, we could care less what the house is worth on the market. for far too long people were equity driven to increase there values so they could continue to borrow against them. we just all need to stop thinking that way and think about how nice it is to have a roof over our heads. just imho

[JimKutkowski]

Think of it as a triangle.

There are three points of the triangle:

1. Your ownership of the house
2. You responsibility to pay the mortgage
3. The mortgage encumbrance on the house

The Chapter 7 discharge severs #2. #1 & #3 still remain. If the mortgage is not paid, the lender can foreclose. As long as you pay the mortgage, you should be able to stay in the house.

One caveat, a discharged mortgage is hard as hell to modify, so don't fall behind.

[LadyInTheRed]

We really want to reaffirm the mortgage since we have a fixed 2% rate. We owe more than it's worth, but by the time we sell down the road, that won't be the case. Our lawyer is so angry when we even mention reaffirming and said no judge would grant that so she won't sign off on it????

Your attorney has given you good advice. You aren't going to lose the 2% rate for failing to reaffirm.

plus here is the bottom line. i wish people would not always be as concerned about building equity as much as maintaining what they have. frankly, since we plan on staying here forever, we could care less what the house is worth on the market. for far too long people were equity driven to increase there values so they could continue to borrow against them. we just all need to stop thinking that way and think about how nice it is to have a roof over our heads. just imho

Easy for somebody who just paid off their mortgage to say!

[IBroke]

wow!! 2% unreal!!!! you are so very lucky. i'm certain your property will begin to rise in value again slowly. we most likely will never see the inflated amounts of years past. i see it here, our home increased in equity substantially, homes are being to sell 50k more than this time last year.

plus here is the bottom line. i wish people would not always be as concerned about building equity as much as maintaining what they have. frankly, since we plan on staying here forever, we could care less what the house is worth on the market. for far too long people were equity driven to increase there values so they could continue to borrow against them. we just all need to stop thinking that way and think about how nice it is to have a roof over our heads. just imho

Bullseye!

We are also way underwater on our mortgage - but the mortgage we have right now simply beats any potential rental (Mortgage Balance: $550K - but $470K of that is interest-free for the next 23 years. Our monthly payment is about $1,250 - and that includes taxes & insurance). We also have a second mortgage ($150K) which will be stripped and completely gone in a couple of months through my mother's CH7.

After that, It's safe to say that we made it in regards to our roof over our head. Having this low HAMP-mortgage (fixed payments for 23 years) AND being able to get rid of the personal responsibility of the first mortgage AND being able to strip the entire second mortgage is simply a dream come true. We pay about $480/month in interest on the $550K. I guess we even beat the 2% of the OP.

And would you believe it? When we received our HAMP, there were people on different forums who suggested we should move to a different place and rent just because we are underwater.

Do I know for sure if we will ever see equity again over the next 23 years? Nope - but that doesn't bother me at all. What I do know is that we're saving a ton of money in housing expenses each and every month - RIGHT NOW. So IF there will be equity again at some point - great. If not - no problem. The stripping of the second mortgage certainly increases our chances in that regards.

It really is time to appreciate what we have RIGHT NOW and if that is a perfect match, ENJOY IT!

[paulsk]

We are in a similar situation and our attorney advised us the same. Reaffirming gives you no advantage as long as you pay your mortgage on time. What reaffirming does is it guarantees your loses too, in favor of the mortgage company. If your loan was included in the BK, stay put and pay as you go. If in future your home value goes down then you are liable for the deficit. Your 2% will stay as long as you pay.

[stevie2012]

I'm in the same boat on the stay and pay for my mortgage. Upside down only 30K but the trustee wouldn't even let me reaffirm nor would my atty. I was disappointed to learn that the creditor won't report payments to the credit bureau though