on Nov 12th, 2007ARM resets: what should you do?
I’m getting a lot of questions from people who are facing ARM resets.
If your ARM is resetting soon, you have to decide if you are able to make those new higher payments. And, you have to look at what your house is worth and whether you want to stay in it or not.
If you can’t make the higher payments, you will want to start working with your lender to see if they can’t modify your loan. Lenders should be able to work with you on this. Sometimes they only work with people who are late. I would rather not pay late, but this may be what you need to do if that is their policy. You can call and find out.
There is a system of putting together a request for a loan modification. You want to show the lender that you can afford x payments. And that you can’t afford anything higher. You want to show them that you are capable of making x payment. They don’t want to do this for you and then three months later be into the same problem.
Also, you want to show the lender that you have little or no equity. If you have little or no equity they are more likely to work with you because they know they will lose a lot of money if they get the house back.
You can call a broker and request a Brokers Price Opinion that you can put in your package. If you know a few tricks, you can ethically and legally get a lower but realistic assessment of how much your house would sell for, and show this to the lender as part of your loan modification request package.
Finally, if you simply can’t stay, you have to figure on selling. Nowadays many people find few buyers in their area and the real value of their house is much lower than what they thought it was. You may have to request a short sale. That means you have to sell your house and get your lender to accept the proceeds as payment in full of your mortgage.
It all can be done. What you shouldn’t do is nothing. At the least, get in touch with your lender’s loss mitigation department and start the conversation.
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