Please Help. Foreclose or not?

[kcguy23]

I messed up. I built a house a few years ago. I owe 410 on the first and 110 on the second. I overbuilt for the neighborhood, and the most I could probably get right now is 450K or so. Both loans are with BOA. The house is also in MO.

I am payed based on the stock market, and so my income has been almost reduced by 1/2. I went from clearing 15K to as it stands now, around 7 or 8. I called last month and got a loan mod. They reduced my interest to 5% for 3 years, and made it a 40 year term. They are also giving me a relief for 3 months, and tacking it on the end of the loan. My payments going forward are going to be 4000K for the next 4 months, and than 3600.00 after that. (I was short on escrow due to the taxes when I was building the house).

I am not, and have never been late on any payments in the past. My fear is with all my other expenses, I am not going to be able to afford this payment, even with the loan mod. I have incurred some credit card debt, have a son that goes to therapy, and car payments that are above what they should be. I have leased two cars, and of course upside down in another. I really don't have assets of much value. I have a bit in savings, but I don't want to get in a deep hole, and not be able to get out. I would love to go back to having a house with a 1100.00 payment. Our lives were so much easier than, and I could have gotten threw this. We just bit off more than we can chew, and were not prepared like we should have been for a crises.

I don't know what to do. I think the thing to do is to get out of this house. I have read things about short sales, but more negative than positive. I am asking for some advice, and for someone to lead me in the right direction. Thanks so much in advance for your help!

[r.m]

[My fear is with all my other expenses, I am not going to be able to afford this payment, even with the loan mod.]

I think your fear is well-founded.

You're saying 7-8k income (gross?) and payments of $4k.

That's not sustainable.

Furthermore, do you have more room to the downside on your income?

[We just bit off more than we can chew, and were not prepared like we should have been for a crises.]

So did most everybody else.

Unfortunately, as a nation, we've come to actually believe the lies we've been told through marketing and salespeople, because for a short while, they were right.

When all conditions were perfect, you *could* buy too much house, and you could finance everything in the low single digits, and you could pretty much sell anything if it got to be too much.

You did the best you could with the information you had at the time.

Like everyone else, you bought into the fictional tales we've been told about real estate values and real returns on the stock market.

The best thing you can do is make more effective decisions going forward.

Dave Ramsey says your housing payment should be about 25% of your income on a 15-year term.

Given the option to start over from scratch, I tend to agree.

Think long and hard about this one.