| Need options for paying off upside down house after closing |
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kim72
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Joined: 17 May 2007
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| Need options for paying off upside down house after closing |
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A year ago my husband and I purchased a home in Phoenix. We are now in Kansas because of a new job and are having trouble selling our home. I know we need to lower our asking price but I'm not finding any options for repaying the remaining balance of the loan after closing. The house is worth about $10,000 less than a year ago and we'll need to pay commission, closing costs, and moving expenses. We have some savings but will still be short about $25,000 at closing. I don't want to do a short sale because of the negative impact it would have on our credit. The largest unsecured loan we qualify for is $12,000. Are there any other options? Can a mortgage company set up a payment plan after closing? My mortgage company said that's not an option. There has to be something besides a short sale. Any advice?
Some people are suggesting that we rent the place. I considered that but when I looked at what homes were renting for in the area I found that they rent for about $1000. Our monthly interest only payment is almost $2000. I can't afford to pay $1000 a month plus rent on an apartment here and all of our other bills.
Last edited by kim72 on Fri May 18, 2007 2:26 pm; edited 1 time in total |
Thu May 17, 2007 6:19 am |
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Bid-Palace
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I'd suggest renting it out until the Market goes back up in your area, then you can sell at the right time.. Due to the Sub-Prime Fiasco, you may/should be able to find a tenant looking to lease to own. Like Muneepenee said, you have to worry about possible bad tenants that wreck the house, delinquent, etc. I am also sure you can find a Property Management Co that can handle everything from screening/fining tenant to everything else.
No, you don't want to do a short sale and Coaster advice of talking to the Mortgage co may help. Another foreclosure is not sitting well in any lender's stomach's right now.
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Thu May 17, 2007 2:10 pm |
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oldguy
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I would rent it for a few years. Phoenix has many property managers, they have a list of screened tenats on a waiting list, so you'll seldom have a vacancy or a deadbeat tenant. At the end of the year you get a 1099 and an annual report - fill out your schedule E taxes (deductions - interest, depreciation, etc).
Do you have a good loan, or is it an ARM that will keep ratchetting ever upward? If it is an ARM, you might want to refi it and get a 30-year FR loan. I like the Interest Only loans for rentals (but FR only, again, no ARMs). The IO gives you a low payment for 10 years, then transitions to a 20-year amortization schedule (by then you will have raised the rent several times so the 20-year payment will match the new rent)
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Thu May 17, 2007 8:58 pm |
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Bid-Palace
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This seems to be a common scenario or situation that some homeowners are facing. I had a friend just this weekend ask for advice on what to do with his current house because he's wanting a bigger house. He knows it's a buyer's market and trying to take everything into consideration.
Luckily, there is a lot of options for people out there if they look around.
Take Care
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Mon May 21, 2007 6:57 pm |
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No-Brainer
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Location: Oregon USA
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I hate to say it, but if I were $25,000 upsidedown in one year I think I would walk and suffer through recovering from the forclosure. Who says if you make the payments another year it will be any better and you'll be another $12,000 in the hole.
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Wed May 23, 2007 3:21 pm |
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efflandt
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Location: Elgin, IL USA
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The problem is, if they are upside down and it is foreclosed, they will still owe money, unless they file bankruptcy, which has its problems if they do not have other living arrangements yet.
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Wed May 23, 2007 10:54 pm |
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No-Brainer
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quote:
Originally posted by coaster
If they file bankruptcy before they're foreclosed, aren't there some protections for their residence? I'm not sure....the law changed this year and I understand it's harder to qualify for Chapter 7. Not that I'm advocating it. A bankruptcy stays on your record for a looooooong time.
So does a $36,000 debt and it won't be over yet. The created bankuptcy laws for a purpose and I think this may qualify.
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Thu May 24, 2007 3:17 am |
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Bid-Palace
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I know there are many benefits of placing your home in a land trust. Not trying to go off topic but something to consider with any home.
It won't solve your problem here but it helps privatize your ownership, keep off credit profile, liens or judgments against an individual are not against property, & etc.
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Thu May 24, 2007 3:02 pm |
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