SavingsTalk.com

banelli

I'm trying to make the smartest financial move. I bought condo in April 2006. Buying the condo with interest-only payments was not the best move, but I wanted to flip it. However, the market tanked in 2006 and I got stuck with the condo. Yes, I live in the condo. Im living paycheck to paycheck right now. I do have reserve capital saved for a year. The mortgage interest is deductible. Condo is in Florida in a gated community with the best location. 1/1 bed/bath. 626 sq feet. I bought it for 100k. TERMS: Fixed rate at 6.5% on the first mortgage, 80k. $605/monthly. Adjusts after 10 years. 2nd mortgage ARM on 20k. Payments $178 montly. 9%interest.<br />Thinking of either selling, renting, or refinancing when the market turns around in future. Holding right now. I cant keep making interest-only payments forever! I need an intelligent person to help me make the smartest financial move. I have 9 more years until mortgage adjusts. Should I sell, refinance, or rent in the future? I want to profit $<br />

highlander

Good luck - youa re going to be seriously hurting the market is terrible - you have no equity and no buyers- rent!

BOB+

Well, since profit is your #1 goal you HAVE to keep the house.
The (selling) market is bad, but if you have good credit you can definitely get a better rate on a loan.

My suggestion: in November get your one (annual) free copy of your credit report and dispute everything negative on it. I say to do this in November because creditors have 30 days to respond to your disputes and EVERYONE takes vacation from Thanksgiving to New Years. Chances are, they won't be staffed well enough to get through all of the disputes. They'll prioritize &amp; won't have time to respond to your dispute. You'll get a LOT of stuff erased from your credit report that way. That'll boost your credit score tremendously and you'll qualify for better rates. I disputed some inaccurate info on mine last month &amp; my score jumped 60 points. Imagine what yours can jump if you play your cards right.
After you receive the results of your dispute from all 3 bureaus, go to your bank or a broker and see what they can do for you.
DO NOT take another interest only loan and DO NOT accept an ARM.
You'll want to refinance as soon as possible or you'll wind up paying on your house for a longer period of time OR you'll wind up with skyrocketed payments in order to pay it off.

Let's say for a minute you refinance today and you have to pay 7.5% interest to get a fixed rate. That still makes your monthly payments (on 100k for 30 years) before taxes and insurance $700. I doubt your interest rate would be that high though. I'm not sure what you pay in tax and insurance right now, but even if your payment jumps a little, it won't be nearly as bad as it would in 9 years.
Ultimately, you HAVE to live in your home for 2 years before most banks will allow you to make your residence a rental (if you told them you were the owner/occupant). After that, it's fair game though.
I might suggest getting a second job to help ease your financial situation. Servers in restaurants make decent cash, just a thought.
Good luck. all things are possible, it just depends on how hard you want to work at it.

alibaba

Something doesn't seem right here, what are the time frames? A 30yr fixed @ 7% would be around $665 and a 20yr same would be $775. Your spending $783 for a fixed and an arm?

What am I missing? At $605 that would be a 20 year conventional at 6.5% roughly, meaning you are making P&amp;I payments on that loan... So is it just the ARM that is interest only?

007

I would keep it for now. You won't be able to sell it and make a profit until the real estate market begins to recover. If you rent it, you will have to move out and pay rent yourself. I don't see the need for you to refinance; you're in a decent position now, and you'll only add closing costs to your mortgage, if you even have the equity.

Consider a second job, if possible, so that you can make principle &amp; interest payments on your mortgage, instead of just interest. An extra principle payment a year will make a huge difference. Not only that, but the actual principle &amp; interest payment would not be much more than you're paying now, because initially most of what you pay is interest on a 30 year loan.

Working a second job might also enable you to pay off other debt to help ease your financial troubles.

Good luck!

ninja

If you are paying an interest only loan, right now you are out of equity since prices have dropped approximately 10% in FL and are due to go down further. Even if prices go back to where they where 2-3 years ago, you have not paid down any principle so profit is out, survival and holding your own is about the best you will do.