The first step is to review the Mortgage Notes on both of your mortgages. The Note will contain the index and margin on your adjustable rate mortgage. Depending on which index is used to calculate your new payment, your rate and payment will not necessarily go up once the initial adjustment is made. Once you have the name of the index used to calculate your rate/ payment, look it up online; the most commonly used mortgage rate index is the LIBOR and currently the LIBOR indexes are less than 1%. Add your margin (from your note) to the index and you have the rate that will be used to calculate your payment on adjustment. It may very well be lower than your current rate. If that's the case, then the reduction will make your payments more affordable, and it sounds like you will be able to continue to make your mortgage payments on time.
If your mortgage rate and payment are going to adjust upwards, and you'll struggle to continue to make timely monthly mortgage payments, then you should take action now. You are on the right path in seeking help with a modification. Continue to pursue the modification on both your mortgages; you'll have a greater likelihood of success on the mortgage on your primary residence. If you're able to get both mortgage payments modified to an affordable level, great; however, if not, it may be time to look in to a short sale on your investment property (I answered a question on short sales recently. Please go to the following link to read my answer to a fellow reader: http://www.bills.com/a-deed-in-lieu-of-foreclosure-vs-a-short-sale/).
In a short sale, you may be able to sell the investment property at its current market value and the current mortgage holder may release you from any additional liability on the outstanding loan balance (in your case that would be the additional $100,000+ that would not be recovered from the sale of the house).
I hope this information helps you Find. Learn & Save.
Best,
Bill
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