mortgage

LISA Asked:

We bought a brand new home in Fl for $285,900 in ...

We bought a brand new home in Fl for $285,900 in 12/2005 with hopes to live a better quality of life while still owning our 1st home in NY. We put $100,000 down and also put in upgrades. We moved back to our NY home in 1/2007 due to lack of job security in Fl. The Fl house has been on market for 1 1/2 years and not one bite! It is now on the market for $205,000 and still nothing! We have had a really hard time paying 2 mortgages and it's about to get harder. I was just dropped by the homeowners for the house being vacant. The bank is about to force theirs on me because I am having a hard time finding a company that will write a policy for a vacant dwelling. If I rent it I can insure it. The rent wont even come to half the mortgage though and we are worried about damage. My husband would like to walk away from the house and forget about it. I say there has to be another way because we are not yet late on any payments. We went to the bank but got employees that didn't have the 1st clue about mortgages. There was someone else we needed to speak to but of course it was her vacation week. I have yet to get a return phone call. So I am hoping someone here can help or tell me what options I may have. Not sure if it's true but I have heard you can't touch equity right now. Is it true? Our NY home is worth a little more than $300,000, we owe only $60,000 and we have never touched the equity. I was wondering if it would be smart to pay most of FL home off with equity from NY home and rent FL home until market changes or retirement compells us to try living there again. My husband would like to let the FL house forclose and walk away from it. His name is on the loan, not mine. I am on the loan for the NY home and fear that the FL home forclosing could hurt our assets in NY. Could it hurt my home in NY or just my husband's credit?

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Featured Answer From WalletPop

David Reed Answered:

Paying off part of the loan in FL wouldn't get rid of your monthly payment, you would have to pay it all off for that to happen. If there's an adjustable rate mortgage on the FL home however by paying the note down significantly the payments would in fact drop. But you'd be taking out an equity loan on the NY home and transferring it to the FL home, not sure where the savings would be, you'd simply be swapping debt.

Laws for deficiencies, when the home goes into foreclosure but the lender didn't get all they needed when it sold so they come after you, are different from state to state. Check with NY laws but my understanding is that your NY home is protected and a lender can't cross state lines to force the sale or place a lien on the NY property. Check with an attorney though for clarification on that.