World Savings PAP, Is it time to get out?

[Joel Fraser]

We have a World Savings Pick a Payment Loan which is now with Wachovia. We got into this loan not fully understanding it but knowing enough to be dangerous. The neg am option was a godsend when we built our home and couldn’t sell the previous one for 11 months. Once we sold our previous home the plan was to make the neg am payments put some of the extra cash into the 401, make extra payments within the year to pull us ahead and the icing on the cake was the possibility the rates could fall, but then life happened mixed in with a couple of bad choices, now, 2 kids later (4 total), a new car payment, an equity line of credit to finish the basement and yard, some credit card debt, current market conditions and the loan with all the options has left me with none. We’re a ways from the 125%, the neg am payment is not a problem, payment adjusts up $100 annually, we’ve never been late but jumping up to the interest only payment is now a reach and forget the 30yr with the current debt. The 401 contribution is at 1%, Savings is a couple of thou,We’ve negotiated a lower rate on some of the credit cards & Titan is up for sale, yeah I know good luck! Is it time to get out of the loan? The World Pick a Payment I still feel is a good one and has some good features.We want to keep the home but can’t refi so we’ve been talking to a company that’s saying loan modification (http://www.modifyloan.net)is the way to go. If it doesn’t work its $695 wasted. Initial discussions are that they have talked to Wachovia about our situation and they are willing to negotiate a loan mod and may be able to get us a 4 to 6 percent fixed rate for five years maybe longer. Are there any other options? Do we have a chance with the loan mod, or is it a waste of money? Is the World Saving PAP salvageable? Any help is appreciated.