balloon home loan maturing. Options?

Kathy547September 7, 2013

Our home loan matures the end of this month& we plan to meet with the lender next week. We want to go in prepared & aware of our options. Our income has decreased since we first took out the loan. We were late on the homeowners insurance & it got cancelled. There are rrpairs needed on the house so insurance agent may not insure us. Would like to keep bank from knowing that until we do repairs & get insurance back. My husband is 53 & I'm 43. Since we've been to the bank we have both lost our jobs but my husband is now disabled & its his check we live off. We are trying to sell his wprk truck - a delivery truck - so we could use that as colleral maybe? I would prefer to not have to pay on this house more than 10 years, less even better. I do want to keep our payments about the same or lower. We've been here about 15 years. We got a paper stating our property value went up so that's in our favor right? Any advice greatly appreciated!

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Kathy, I'll just be blunt. Have you considered renting? There is no shame in renting. It is in many cases the responsible choice.

Here's a comment coming from a 30 year banker...

Not having insurance on the property is enough for your lender to call the note due and payable immediately. It's right there in your mortgage. Your lender will require proof of insurance before closing any extension. If the property is uninsurable there will be no loan extension. Lying to them is not a good idea. That is bank fraud. Not something you even want to consider.

From my vantage point and experience, I would counsel you and your DH to set a meeting with your loan officer at the bank. Lay the entire scenario out on the table with that bank officer. The chips will fall where they may. Banks want to make loans. That's how they make their money. Sometimes though they just can't. This might be one of those times.

Best of luck to you and your DH.


    Bookmark   September 9, 2013 at 3:00PM
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I thought if the insurance was canceled on a mortgage, the insurance company notified the loan holder????

    Bookmark   September 9, 2013 at 11:48PM
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Most insurance companies do notify if a homeowners policy is cancelled, Emma. There may be some that don't, I don't know. And that doesn't necessarily mean the info has made it to the specific loan officer.


This post was edited by triciae on Tue, Sep 10, 13 at 12:09

    Bookmark   September 10, 2013 at 12:05PM
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Providing incomplete or inaccurate information to a lender could constitute fraud so I'd be careful with what you are implying or contemplating. That could be criminal activity. You could be setting yourself up for future trouble if you get into a loan that you may not be able to cover. Do your homework, to find your options. Give them the true picture, see what they say.

    Bookmark   September 10, 2013 at 1:52PM
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Haven't met with the loan officer yet but have talked to her on the phone. Before we talked to her we called an insurance agent & he said he had to do some figuring & get back to us on premiums. When she called she asked if we had insurance & my husband said no but we were getting it today. We had already decided to go with this guy no matter what the costs were because we didn't have much of a choice. He calls back with the figures & my husband tells him the house needs repairs. The guy says he can't insure us. Its now about 4:30. We call one place & they're gone for the day. We had been with State Farm for years & didn't want to go back to them but my husband called them. They won't insure us until we've been insured with someone for 6 months. Tomorrow we'll call more insurance companies.

Its so frustrating. For years we paid monthly premiums on auto & homeowners. There were times we'd be late but then we'd catch up. For years we paid our insurance premium but when the butane man said we had a leak, insurance wouldn't cover it. Same when we had a water leak. So we didn't call them when the roof started leaking or the septic started messing up. Figured those were normal wear & tear like the gas & water. They cancelled us for being 30 days late. We didn't realize we had been cancelled until I called them. I had 2 different amounts & had called to find out which was correct so I could go by & pay both months. When she said we'd been cancelled, after all those years, it pissed us off. I got car insurance with another company but put off the homeowners "temporarily". Which stretched to a year & a half.

    Bookmark   September 11, 2013 at 12:53AM
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Does the septic system function? If not, does your town/county know? They might pull your CO without a working septic both for health reasons and environmental protection.

You need to speak with your loan officer. Delaying will only make the situation worse.


    Bookmark   September 11, 2013 at 12:40PM
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Septic line goes out to a leach field, which is out in the woods. Years before we bought the place an access road was made leading to the neighbor's house. We think he busted the pipe from hauling bales of hay down to his house. Then my husband got someone to move the lid off the tank & they disappeared, leaving it to fill up & overflow. I am wanting to get someone to pump it out, but its collected leaves & such so I'm not sure if that's possible. Would like to replace the whole thing but we're having a hard time finding out what needs to be done, in the order, etc. Our plans are to get whatever insurance we can for now, make repairs on our on as we can afford them, & then in a year or so redo the insurance to better suit us. One of our biggest mistakes has been letting a small thing go until it got bigger (& more expensive).

    Bookmark   September 11, 2013 at 1:22PM
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The first replay in this thread was:

"Kathy, I'll just be blunt. Have you considered renting? There is no shame in renting. It is in many cases the responsible choice. "

With all that you said here, I honestly believe that is your best choice.
You are not capable of doing all the things homeowners need to do... and now you are also short of cash to have others do them for you.
If you rent, the landlord takes care of all the problems!

    Bookmark   September 11, 2013 at 3:04PM
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You need to get away from this place and rent.

You have no understanding of how collateral on home loans works if you think you can put up a used truck for it. The property is the collateral.

You've let your property fall into disrepair, you have failed to keep up with your insurance premiums, and you say you're "only late sometimes"! Well, you're dealing with businesses, who also have to pay their bills on time. It appears they cut you some slack multiple times, and you appear to expect them to continue to do so. Why should they? You are a deadbeat customer.

I can't imagine anyone refinancing a property with a non-functional septic system, roof leaks, and a history of non-payment on basic insurance. Too risky for the mortgage company.

This post was edited by mary_c on Wed, Sep 18, 13 at 16:11

    Bookmark   September 13, 2013 at 8:25PM
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Yes, the best advice anyone can offer in your situation, I think, is to get out from under. Sell the house, rent until you're financially able to start out fresh. I don't see any other way, given you seem to have limited fnances.

How about looking into your town's subsidized senior housing? You're not technically old enough, but they do make exceptions for disabled citizens. The rent is calculated on what you can afford--they take your income and expenses into account. Your rent will be recalculated annually. My mother lived in a beautiful, spacious, luxory apt in the senior towers in her town and paid $230 per month! On the open market, the apt. would have been a minimum of $1600--and I'm talking about 10 years back. Definitely an option you might look into. Check out the senior housing in several towns to see what you like. Good luck

    Bookmark   September 13, 2013 at 9:34PM
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Did you meet with the loan officer to discuss your options?

You have been paying on the house for 15 years. Do you have any idea how much you still owe and what the fair market value of the house is in its current condition?

If you owe less than it is worth, you may be able to sell for more than you owe and walk away with money in your hand.

If you are upside down and owe more than it is worth, it may not be possible to get a new loan even with excellent credit and jobs.

Moving is such a hassle, it may be better to stay put. But depending on the condition of the home such as working plumbing/septic, leaking roof, it may be better to move to a new place if you can not afford to do fixes.

Even if you can not get a new loan, it could take months, even years for the bank to get around to kicking you out. So do not move out until they tell you that you must. I have seen it take several years several times where homeowners stopped paying and lived in their home 1-2 years before the bank finally kicked tjem out. I know of 2 other cases where the family moved out when they stopped making payments, and the house sat empty for years afterwards.

I am sorry for your stresses. It sounds like there is a lot going on all at once!

    Bookmark   October 4, 2013 at 6:36PM
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Okay, an update! Sorry I would have done it sooner but forgot where I posted this!!! We're staying where we are. We still owed about $30,000 when we met with our loan officer. Because of the laws or the kind of loan we had or whatever, we are doing another balloon payment so in 5 years we'll owe about $16,000. We did have a problem with getting insurance - everyone wanted us to have already been insured for at least 2 years before they would talk to us. Had a problem with people not showing up so we went with the one insurance that had someone show up. We still have repairs to do but it has always been our intention to pay for them ourselves & make adjustments later with the insurance. I have been trying to find out about what to do with our septic situation & all the information I can find looks like we have a cesspool instead of a septic line. I am having a really hard time finding out who to ask & what exactly I need to be asking. It's extremely frustrating. We live in a rural area - population is maybe 1000 so moving wasn't really an easy option.

    Bookmark   January 4, 2014 at 11:44AM
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