Famed Columnist gives rotten mortgage advice

[patb]

The washington post carries the Glink/tamkin column
“expertrealestatetips.net” and boy oh boy didthey lay a stinker.

I live in California and have a first mortgage and a home equity line of credit with the same bank. My first mortgage has a rate of 5 percent fixed for 30 years and the home equity line of credit is prime plus 1 percent.

I have been paying my loans on time, without any late payments. I called my lender to ask whether I could combine the loans or refinance them into one loan, and I was told that I could not. The lender offered me a first mortgage refinance at a rate of 4.65 percent plus one point for 30 years, with no PMI, and no income or asset verification. Then the lender said I could add up to $2,500 of the total closing costs to the loan.

I am upside down on my mortgage, and my current loan-to-value ratio on my property is 155 percent. I made a separate call to the bank to inquire about converting the HELOC to a fixed rate and was offered a 10-year rate at 8.25 percent, which I declined.

I am looking for advice on how to approach my lender and ask to have both loans converted into one loan at today’s current rates.

now this is a pretty common situation..

But he has a decent fixed mortgage.

He’s underwater and has a HELOC.

What advice does he get?

If interest rates remain stable or rise just a bit over the next several years, you certainly will benefit from the terms of your current loans without having to pay money to refinance. By prepaying your HELOC, you can head off any extra financial stress caused by rising interest rates.

Better advice would be. Consider dumping the HELOC. The HELOC won’t foreclose, so, get out, fast…..

[temeculaguy]

I don’t get it, what do you mean by “dumping the heloc?” At this point he can’t roll it into a single loan at the lower rate, that is evident by what he wrote and the advice. The advice to pay down the heloc faster, seems good advice to me, since rolling it is out of the question.

Do you mean for him to not pay the heloc? You said they wont foreclose, the hell they wont. Helocs can and will foreclose, even if the primary loan is current. That’s the deal with helocs, it’s collateral is the house. If they choose to not foreclose because it will wipe them out after the first is paid, then they can and will rack fees and interest and credit hits while you dont pay them. This guy was looking to maximize his situation, get a good rate, not take was isn’t his, there’s no mention of “I can’t afford to pay.”

[temeculaguy]

I don’t get it, what do you mean by “dumping the heloc?” At this point he can’t roll it into a single loan at the lower rate, that is evident by what he wrote and the advice. The advice to pay down the heloc faster, seems good advice to me, since rolling it is out of the question.

Do you mean for him to not pay the heloc? You said they wont foreclose, the hell they wont. Helocs can and will foreclose, even if the primary loan is current. That’s the deal with helocs, it’s collateral is the house. If they choose to not foreclose because it will wipe them out after the first is paid, then they can and will rack fees and interest and credit hits while you dont pay them. This guy was looking to maximize his situation, get a good rate, not take was isn’t his, there’s no mention of “I can’t afford to pay.”

[temeculaguy]

I don’t get it, what do you mean by “dumping the heloc?” At this point he can’t roll it into a single loan at the lower rate, that is evident by what he wrote and the advice. The advice to pay down the heloc faster, seems good advice to me, since rolling it is out of the question.

Do you mean for him to not pay the heloc? You said they wont foreclose, the hell they wont. Helocs can and will foreclose, even if the primary loan is current. That’s the deal with helocs, it’s collateral is the house. If they choose to not foreclose because it will wipe them out after the first is paid, then they can and will rack fees and interest and credit hits while you dont pay them. This guy was looking to maximize his situation, get a good rate, not take was isn’t his, there’s no mention of “I can’t afford to pay.”

[temeculaguy]

I don’t get it, what do you mean by “dumping the heloc?” At this point he can’t roll it into a single loan at the lower rate, that is evident by what he wrote and the advice. The advice to pay down the heloc faster, seems good advice to me, since rolling it is out of the question.

Do you mean for him to not pay the heloc? You said they wont foreclose, the hell they wont. Helocs can and will foreclose, even if the primary loan is current. That’s the deal with helocs, it’s collateral is the house. If they choose to not foreclose because it will wipe them out after the first is paid, then they can and will rack fees and interest and credit hits while you dont pay them. This guy was looking to maximize his situation, get a good rate, not take was isn’t his, there’s no mention of “I can’t afford to pay.”

[temeculaguy]

I don’t get it, what do you mean by “dumping the heloc?” At this point he can’t roll it into a single loan at the lower rate, that is evident by what he wrote and the advice. The advice to pay down the heloc faster, seems good advice to me, since rolling it is out of the question.

Do you mean for him to not pay the heloc? You said they wont foreclose, the hell they wont. Helocs can and will foreclose, even if the primary loan is current. That’s the deal with helocs, it’s collateral is the house. If they choose to not foreclose because it will wipe them out after the first is paid, then they can and will rack fees and interest and credit hits while you dont pay them. This guy was looking to maximize his situation, get a good rate, not take was isn’t his, there’s no mention of “I can’t afford to pay.”

[Eugene]

Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.

[Eugene]

Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.

[Eugene]

Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.

[Eugene]

Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.

[Eugene]

Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.

[patb]

[quote=Eugene]Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.[/quote]

That’s what I was aiming at.

The HELOC is utterly underwater, screw them, they have nothing.

What are they going to spend 50K on foreclosure?

Keep paying the first and ride out the wave.

or

Stop paying both, save the money and when the first comes
to foreclose string it out, and move into an apartment.

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

if we go into 100% inflation, then sure, he has a decent asset,
but, I kind of doubt that will happen.

[patb]

[quote=Eugene]Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.[/quote]

That’s what I was aiming at.

The HELOC is utterly underwater, screw them, they have nothing.

What are they going to spend 50K on foreclosure?

Keep paying the first and ride out the wave.

or

Stop paying both, save the money and when the first comes
to foreclose string it out, and move into an apartment.

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

if we go into 100% inflation, then sure, he has a decent asset,
but, I kind of doubt that will happen.

[patb]

[quote=Eugene]Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.[/quote]

That’s what I was aiming at.

The HELOC is utterly underwater, screw them, they have nothing.

What are they going to spend 50K on foreclosure?

Keep paying the first and ride out the wave.

or

Stop paying both, save the money and when the first comes
to foreclose string it out, and move into an apartment.

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

if we go into 100% inflation, then sure, he has a decent asset,
but, I kind of doubt that will happen.

[patb]

[quote=Eugene]Both answers are incorrect.

The correct answer is, refinance the first while it’s still beneficial to do that (or don’t – 5% 30-year fixed is quite good to begin with). Miss a payment on HELOC, then call them, inform them that you’re upside down, inform them that they’ll be wiped in the event of a foreclosure, and offer to settle for $5,000 cash.

Of course, this answer is not suitable to be printed in a real estate tips section of The Washington Post.[/quote]

That’s what I was aiming at.

The HELOC is utterly underwater, screw them, they have nothing.

What are they going to spend 50K on foreclosure?

Keep paying the first and ride out the wave.

or

Stop paying both, save the money and when the first comes
to foreclose string it out, and move into an apartment.

It makes no sense for someone in California who is -35% on equity
to pay into a mortgage that is never going to see the surface in
our lifetimes, unless you really expect the inflation rates to explode.

if we go into 100% inflation, then sure, he has a decent asset,
but, I kind of doubt that will happen.

[Author]

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