I’m seeking advice as I navigate the aftermath of my partner’s passing during the COVID-19 pandemic. We purchased a house together a few years ago with a jumbo loan at a 3.25% rate, a rate we secured due to our combined income. Since his death, I’ve been managing alone and haven’t been proactive with my finances. Recently, I tried to refinance, but my application was denied due to a high loan-to-income ratio based on my sole income. I’m currently paying $5,600 per month on a remaining mortgage balance of $1.09 million, with the house now valued at approximately $1.6 million. My fixed-rate mortgage ends in June 2025, at which point I’m concerned the rate could increase significantly. I’m exploring my options, which include selling the house or hoping for lower rates by 2025. I’d appreciate any insights or advice on how to proceed.
Check your original mortgage documentation for specifics on rate adjustments. If you’re currently managing the payment but concerned about potential increases, consider speaking to a financial advisor about strategies for managing or restructuring your debt.
@Kim
If the mortgage is sustainable for now, maintaining ownership could be beneficial long-term. However, plan to refinance or reduce the principal to manage future financial risk effectively.
Skyler said:
@Kim
If the mortgage is sustainable for now, maintaining ownership could be beneficial long-term. However, plan to refinance or reduce the principal to manage future financial risk effectively.
Ensure you’re considering all expenses, including property taxes and insurance, which can significantly impact overall housing costs.
@Kim
Verify with your insurance provider and tax office that you’re up to date and understand how these costs integrate into your total monthly expenses.
@Kim
Consider if a life insurance payout or other unforeseen financial resources might aid in covering increased costs.
Understanding the type of adjustable-rate mortgage you have is crucial. Contact your mortgage servicer to clarify the terms and explore possibilities such as loan modification if the upcoming adjustments are unsustainable.
It’s important to fully understand the specifics of your ARM, including any caps on rate increases. Your loan documents will provide this information. If you’re considering a modification, start this discussion early with your lender to understand your options.
Selling may be a viable option, especially if the financial burden becomes too great. Consult with a local real estate agent to get a precise market analysis, which can offer more accuracy than online estimates like Zillow.
@Meade
If selling is the route you choose, prepare early to maximize the sale price and minimize financial strain during the transition.
Your ARM adjustment will depend on specific indices and margins detailed in your loan documents. Understanding these can help you predict and plan for future rate changes. Calculators are available online to model potential future payments based on these variables.
If retaining the home is a priority, consider strategic use of your savings to supplement mortgage payments temporarily. However, ensure this strategy is sustainable long-term before committing.
Review the terms of your loan to understand the caps on rate increases and total payment changes. This information will help you make an informed decision about whether to keep the house or sell based on financial projections and current market conditions.
Explore the possibility of taking on roommates to offset the mortgage cost if you prefer to keep the house. This can provide financial relief without requiring major lifestyle adjustments.
Assess your overall financial situation honestly. If the costs are unsustainable, it may be more practical to consider selling the house and finding something more affordable.
The adjustment of your rate will depend on the terms set at origination, particularly if tied to a specific index like LIBOR or prime. Check your documents for details on how adjustments are calculated and what you might expect at the first change date.