Advice Needed: Lowering Monthly Mortgage Payments

Seeking Advice
1

I bought a house in June 2022 with my grandmother and wife. Long story short, my grandmother didn’t disclose $100k in credit card debt and filed for bankruptcy less than a year later. She’s no longer living with me. My wife and I separated for a while, but she’s back in my life, though not living here.

The mortgage was supposed to be split three ways, but now it’s entirely on me. Payments were manageable at $2,100 a month, but after an escrow adjustment due to increased homeowner insurance rates, they’re now $2,400. I’ve shopped around for lower insurance rates but haven’t found significant savings. My interest rate is 5.25%, and refinancing isn’t a good option due to current rates.

I’m feeling stuck and could use advice on how to lower these payments or make the situation more manageable. Thanks in advance!

2

Unfortunately, property taxes tend to increase yearly. From what you’ve shared, it seems this house might not be affordable long-term.

3

Hopefully, you’ve made amends with your wife. Sounds like a tough situation for both of you.

4

Consider renting out a room to help with expenses. It’s a quick way to reduce your financial burden.

5

Keep shopping for insurance. Even a small reduction in premiums could help over time.

6

Selling might be your best option if you can’t make it work. If others on the deed don’t agree, you might need to consider a partition action.

7

Talk to your lender about extending the loan term from 30 years to 40 years. While this increases the total interest paid, it could give you temporary relief with lower payments. You can always refinance later or make extra payments toward the principal to offset the added interest.

8

@Bali
Be cautious with modifications. They might come with risks like balloon payments or limiting your ability to take out equity loans. Use this option only as a temporary measure.

9

Do you have PMI? If so, you might be able to get it removed if you have enough equity in the home. It’s worth checking with your lender.

10
  1. How much equity do you have?
  2. Are all three of you on the deed?
  3. Who’s on the mortgage?
11

Tan said:

  1. How much equity do you have?
  1. Are all three of you on the deed?
  2. Who’s on the mortgage?

We have $240k in equity. All three of us are on the deed, but only my grandmother and I are on the mortgage.

12

@Whit
If you have that much equity, look into a mortgage recast. It could lower your monthly payments while keeping your current interest rate.

13

If you have some savings, you could make a large principal payment and request a recast from your lender. This could reduce your monthly payments without refinancing. A recast usually costs $250 to $500.

14

Unless you have a significant nest egg to pay down the balance and recast the loan, consider renting out rooms or finding another way to split the expenses.

15

Selling might be your best option. It sounds like the house is beyond your current financial capacity.

16

If you have extra bedrooms, renting them out could help. Alternatively, consider selling the house and looking into options to remove anyone not paying from the deed.

17

My escrow adjustment made my payments go up 14%. It’s crazy how quickly these costs add up. You’re not alone in this.

18

Surprised the underwriters didn’t catch your grandmother’s credit issues before approving the mortgage. Would selling or renting out the house be an option?

19

Peyton said:
Surprised the underwriters didn’t catch your grandmother’s credit issues before approving the mortgage. Would selling or renting out the house be an option?

I was wondering the same thing. It’s strange that her credit wasn’t flagged earlier.