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I’m Upside Down on 30 Year Interest Only Mortgage and Medical Debts. – Scott

“Dear Steve,

Upside down with home of more than $130,000 in Florida. Two loans, second being a HELOC at time purchase to avoid original PMI with Countrywide. BOA bought Countrywide and then sold second to Greentree. 30-year interest only at 6.625 on first and 8.125 on second. BOA will not work with with me as DTI is approximately 21%. This is not a retirement home and will take at least 15 years of consistent growth to break even. I am current and always have been. This is especially concerning as I had $13,000 in out of pocket medical I paid in 2011 for a sick child.

What are my options, if any, other than a short sale scenaro?

Scott”

The Answer

Dear Scott,

Do you want the long slog answer or the deal with it all now and start over solution?

If your child is still sick then it might make a difference in what ultimate solution to pick.

But from what you shared, it seems like the mortgage, and especially since one or both are interest only notes, just don’t make logical sense at this particular point in time.

What is the value of your home, your first mortgage and your second mortgage?

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Scott

    Steve:
    Thank you for the prompt response to my question. In answer to the issues you brought up, my first mortgage is an interest only loan, with a current approximate balance of $288,000. The second is a principle/interest HELOC and is approximately $70,000. (Neither is Fannie Mae or Freddie Mac.)
    My child’s illnesses have long term implications and some significant medical procedures lie somewhere in the future.
    While we are not in danger of losing our home at this point, bringing my wife home from work to care for our son has significantly impacted our financial welfare. (She is not on the loan.) Likewise, while I have an unblemished credit history, like many in my current situation, I do not want my family’s home to ruin our retirement dreams and it appears there are no programs available to assist those in my position.
    I guess that is a roundabout way of saying I am looking for the most prudent decision, given these circumstances, that a man in my position can most quickly rebound from and move forward, while a family depends on me to make the right calls.
    Thanks for your time and thoughts.
    Scott

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