I need to make a mortgage decision, what would you do?
by Mortgage Rates on Saturday, October 9th, 2010 | 14 Comments
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rent it and live with your parents
forclose since the house isnt worth what you owe
Ideas:
Get a boarder?
Pay what you can. This will put you in a better position to negotiate with the lender in three months than just not sending anything.
Put a “For Sale” sign up, clean the house cleaner than it was when you moved in, and hope for the best.
ADDITIONAL
To correct something on a later post…
There is no such thing as “giving the house back to the bank.” The bank never owned the house. You purchased the home with borrowed money. You and the bank did not purchase the home together. The bank did not purchase the home and rent it back to you. Only you purchased the home. You can force the bank to foreclose by intentionally not making payments. If that happens, the bank will, for the first time, gain possession of the home. The bank will get the house. The bank will not get the house “back.” And you will be “giving” nothing.
if your upside down there not going to want to forclose i would say best bet would be to make either one stop making any payments until they are willing to.
ask your realtor or someone with the knowladege of what you couuld currently rent your home for.
chances are you are going to be feeding this giant amount of debt for the next couple of years because your mortgage is going to adjust in another six months anyways. Sometimes its better to just cut and run. your credit will be messed up for a while. feel free to contact me at
ocmortgages@gmail.com
its like this
the banks and sleazy companies made mortgages like that to half the customers, like zero interest for the first year , then 1K per year, then 2 K the next year, that way they could afford to buy and didn’t realize the rate would go up in 2 years so much
so now the fed is printing lots of money to fix it, some French banks failed even, the stock market even had a sig blip then rebounded
everybody should just give the houses back to the banks, then move someplace warm for 3 years, then buy en back from the banks at like 10% what they are worth, or trade with the people in Mexico for awhile, say like a 2 year trade
You could find a cheaper place to live. Use the money you get from the house to make the mortage payments. Then when get the finances back to where you can make the payments, move back in. Or, if you can, rent out a couple of rooms to students. Use that money to help offset your cost for the payments. Cash out your equity and make a couple of payments. Do whatever you can to avoid taking the hit on your credit. That number is important.
Find a roommate to help with the payments.
1 & 2 are going to RUIN your credit rating! And I don’t think 3 is too good either.
Run an ad in a local paper, but require ironclad references!!
Advertise on local free radio shows, put up notices in upscale restaurants, and spread the word through friends. If you charge only the $800 from them, they should be glad about not sharing utilities.
I can’t imagine what sort of home would cost 3500 a month—MY mortgage is only $400!
Ouch! All of the possibilities are about as unappetizing as one might imagine. I make it a close call between choices 1 and 3, and with no obvious way to pungle up $46,000+, I’d be inclined to go for #1. Which will do nasty things to your credit rating, but that’s life. It is always best to be up front with the lenders; if their options are to foreclose or to try to work out a deal of some sort, they can try to do a deal. The REO department won’t have any better luck than you at peddling the place for $446k.
Postscript: Another responder has suggested finding a tenant. This could clearly help.
Sell it as fast as you can. Don’t go for a foreclosure, if you have too find someone to rent out part of the house until you have a buyer. You will eat some of the loss with the difference between what you owe and what you sell it for, but that’s better than having 446K on your credit.
With the for closure issues you may never be able to buy another home again. Today with the Subprime loans killing the housing market along with mortgage companies dint put yourself in the position of ruining your future.
So, clean it up, try to find a renter for now and sell it. You will be doing yourself a favor in the long run.
I understand completely. You are in fact screwed no matter how you look at it. The housing market (in the US) will not be at the poiunt it was last month for at least 12-18 months from now…thus it still has father to crash.
Not saying that it is the right thing to do, but many people are walking away from these deals. It will ruin your credit promptly. Unfortunately, it may be the most prudent choice…disaster now instead of later.
Hail Mary Mother of Real Estate is like playing the lottery with the current market conditions. But, one never knows what the future holds…
A shortsale will save your credit, but will the bank accept a deal like that with no property to lean agaisnt?
What about option #4… Take on a housemate for $800.00 per month?
Check out this site, I’m sure they have the answer you’re looking for.
You can always walk away from the property by talking to your mortgage lender and doing a “Deed In Lieu.” This wont affect your credit as bad. Hope this gives you another way.
While I agree mostly with RH Saunders here, there is both a mix of good, bad and simply moronic advice so far. I would say that unless you can bring in a border to help cover the extra monthly mortgage costs your choices are limited. Realistically, you are going to lose that home.
Now that we have established that, what is your next step? If a short-sale is possible it might work, but with the declining prices, and no prospect of real estate values turning back up anytime soon, buyers will be scarce. Plus, you are likely going to need to pay a Realtor their commission. Even if you sell the property yourself, you probably will want to “broker co-op” or pay a selling agent their (standard) 3% if they can secure a buyer for you. That is an additional $12,000. Also, a short sale is viewed as “forgiveness-of-debt” by the IRS. Currently, an amount the lender takes, below what is owed, will be viewed by IRS as income to you – and you will be taxed on this phantom income. Note, there is some movement afoot to change this rule, but nothing is imminent.
My professional opinion is to save your money and sacrifice your credit. You could stop paying the bank and live “rent free” until the sheriff comes to evict you after they foreclose. Or, there is this: deed-in-lieu. Looks just as bad on a credit report if it is reported, but there is nothing to say that the lender MUST report it. Try this: call the people servicing your loan on their toll-free #. Ask for the loan workout dept. Explain your situation to them frankly and honestly. Tell them you are prepared to lose the house to foreclosure and the damage it will due to your credit. By declaring bankruptcy as part of the process you should be able to stretch your “free” stay in the home you are losing to 12 months or so.
If they faint, wait until they are again conscious and explain that you don’t want to do that at all and would rather work with them to find a solution that works for both of you in this bad situation. You will voluntarily turn the house over to them in a very short period of time, perhaps 30 days. This spares them the expense of foreclosure and the costs of carrying the house while you live there and do not pay. In exchange, they will cancel your mortgage, not seek a deficiency judgment, and BASED ON THIS NEW AGREEMENT – report you to the credit agencies as “paid as agreed”.
Go rent for a while. If this works, there is no reason you can’t buy another, less expensive, place when you feel the time is right. Hope it helps. Good luck!
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