Comparing 2 Mortgage Options - How To Decide?

Fairone

LoanSafe Member
Aug 19, 2013
14
0
1
I'm not sure if this is the correct forum but here goes:


Last year I was unemployed for several months and fell behind on my mortgage payments.
My mortgage holder, Chase, has now offered me a HAMP mortgage and I've made 3 trial
payments and will very soon have to decide whether to accept this new mortgage or not.
Fortunately, earlier this year I found stable employment and have now saved enough money
to catch up with my arrears of approx. $9k (although I still owe Chase a further 10k for
property taxes that they paid on my behalf).
I'd like some advice in order to make a decision on whether to pay off my arrears
and stay with my original mortgage or to accept the new HAMP mortgage. Here are some
details in order to make a comparison:

Original 15 year mortgage
-------------------------
Monthly payment $1336
Interest rate 4.5%
Term remaining 47 months
Unpaid principal $65123
Monthly taxes $572
Hazard insurance $95
Total monthly payments: $2003 (including taxes and insurance)

New HAMP 7 year mortgage
------------------------
Monthly payment $1777....
Interest rate 2%
Term 85 months
Total monthly payments: $17 (including taxes and insurance)

I'm having difficulty understanding that even though the new mortgage has less than half
the interest rate of my original loan, if I take that option I'll be paying over $50k
more. I'd really like to stick with my original loan and have my house paid off within 4
years but how do I handle the 10k outstanding amount with Chase? Any suggestions?

Also, if I'm forced to go with the new mortgage how are extra principal payments handled?
The way I understand it interest is calculated up front and the reason that the above
higher interest loan is more attractive is that I am at the tail end of that mortgage and
principal is largely being paid as opposed to interest.
 

Fairone

LoanSafe Member
Aug 19, 2013
14
0
1
Edit: That should read Total monthly payments: $1777 (including taxes and insurance) for the new mortgage.