Today's Mortgage Rates

Because I live in one of the “sand states” where many homeowners are finding that they have lost 50-60% of their home value since they bought it, I am constantly being asked questions about “whether or not you think I should walk away”.

And the real answer is… it is a very personal decision — and no one can really tell you what you should or shouldn’t do.

But it is becoming enough of an issue that 60 Minutes decided to do a story on it — and oddly enough, many of the stories they highlighted were right here in Arizona.

Now, one thing they didn’t cover in the story is that if you find that you are underwater in your house and are considering walking away – if you don’t make the decision today, the same decision will be in front of you for quite some time.

Home values are expected to rocket up anytime soon — and so if you find yourself in the situation where your home has lost a significant portion of its value since you bought it… only you can decide what is right for you in your individual situation.

Many times (many, hundreds of times) people ask me a simple question:

Should I keep making my mortgage payment or should I do something different?

And the answer I usually give is something close to “it depends“.

And what it actually depends on is something different for each person. It depends on their personal financial situation, their family situation, their job situation, their overall life situation if you will.

And each person is in a different spot when it comes to what their entire life situation looks like when it comes to making decisions like this.

And at least one other local loan officer gets these same questions, so see what he has to say about it:

Now.

The first thing I always bring up is that if you are in a situation where you can’t/won’t make your house payment, you should strongly consider speaking with an attorney who is familiar with real estate law in your state. Whether or not you end up hiring that lawyer as counsel is up to you, but it is a really, really good idea to speak to them about your options.

And after you speak with an attorney, it is going to be fairly clear that your basic options are:

1. Get your lender to grant you a loan modification
2. Short sale your house
3. Negotiate for a deed-in-lieu of foreclosure
4. Go through foreclosure

Each one of these options has different risks, possible outcomes and potential reliefs. It is important for you to be clear on what each scenario looks like and what your risks are for your individual situation.

The best way to get clear on what your risks are?

Speak with a lawyer.

With as many people who have either been through foreclosure, did a deed-in-lieu of foreclosure or short sold their house over the last few years, I had been wondering if Fannie Mae/Freddie Mac/FHA would change their guidelines as to how long someone had to wait before getting another mortgage.

And recently Fannie Mae changed their guidelines where now someone who had a foreclosure or deed-in-lieu of foreclosure can now buy a house and get a Fannie Mae mortgage in as little as two years with a 20% down payment.

That’s right – according to the new announcement by Fannie Mae, you can now get a mortgage 2 years after foreclosure.

Prior to this change in policy, if you had a foreclosure you had to wait at least four years until you could qualify under the Fannie Mae guidelines for a mortgage and at least 2 years if you sold your home in a short sale.

The change in policy will go into effect for any loan application taken after June 30, 2010  and the policy will also be updated in the Desktop Underwriter software so your loan officer will be able to render a decision regarding your file on the spot of application.

In my opinion, this is probably a good policy change for the housing market. With as many foreclosures that have happened, there are a large number of future homeowners who are currently renting due to a recent foreclosure and when they start coming back into the market it will help prop up housing prices.

So with the new 2 year rule and a 20% down payment requirement – one thing is clear: if you are going through foreclosure, be sure to save your money… for a down payment on your next home.