POLL: What would you do? House question

[MommyKelly]

We bought our house 2 years ago. It is now worth almost 75K LESS than what we paid. It is also a seller finance at 9%. We are paying about 41% of our income to the payment. When we bought it Dh was making 3x more. He had a heartattack 4 months after papers were signed. He now works for a non profit which he loves but pay is much less.

The original sellers are divorcing. One has offered to buy the house back from us. It will cost us nothing, they will pay the closing costs. It is more a transfer of title almost since the loan is still in their name. We will also make nothing.

We will not be able to purchase another home for at least 2 years probably. And will have to rent. Rental property would save us at least $500 per month depending on where and what we rented.

Is it all that great to be a homeowner? It hasnt seem to benefit us except that we can do what we want with the house.

I just cant figure out whats right to do.

[tinuviel_k]

How would it work with the sellers buying back the house? Will you be out $75K? Or will they be buying it back for what you owe?

[thixle]

I'm not a financial wizard, but if your house is worth 75K LESS and the previous owners are willing to buy it back clear... heck yeah! Take that offer while it is there!

Your house payment is supposed to be 25% of your income. If you can RENT for LESS than you can OWN right now, well, I'd do it so I would have a little to put back... once you've rented a while and the housing market levels, you might (or might not) want to own again.

There are some wonderful perks to renting (like appliance replacement, roof repairs, etc, etc that you don't have to cover!)... don't let anyone make you feel like less if you choose to rent.

[Denvergirlie]

Originally Posted by MommyKelly

The original sellers are divorcing. One has offered to buy the house back from us. It will cost us nothing, they will pay the closing costs. It is more a transfer of title almost since the loan is still in their name. We will also make nothing.

I would cut your losses, and get out. Unless there is some reason that you just love the house, but even then you have a great out.

Do a Pro and Con list:

Get out of house:

Pros:
Lower monthly housing cost - once you move, more inline with new reduced income
No cost to you - you basically just paid really high rent - you didn't really "lose" any money in the deal, nor do you have to sell and possibly need to sell at a $75K loss
Now have money to save monthly

Cons:
You have to move
??


HTH, good luck

[frontstreetmama]

I wanted to own a house for so long and now that I have one, I realize that it isn't all that it is cracked up to be. Don't get me wrong, I think that if you have a good downpayment *and* the income to carry it (including upkeep & repairs) and ~this is important~ it fits your lifestyle then having a home is a great investment and makes more sense than renting...

However, if you can rent, save $$$ and live a lifestyle that you enjoy, then there is nothing wrong with that.

My friend pays unbelievably low rent to live in an amazing condo and is able to put away $1000/mth that having a mortgage and associated fees wouldn't allow her to do.

I think that if you can save money monthly and you can get without taking a big hit, now would be the time to do it!

[hopefulfaith]

What a perfect opportunity to get out and start over. Unless it is absolutely the perfect place for your family, I'd go.

[Sarah W]

Originally Posted by hopefulfaith

What a perfect opportunity to get out and start over. Unless it is absolutely the perfect place for your family, I'd go.

I agree. Even if the house hadn't depreciated so much, the interest rate you're paying is insane. Even if you do rent for a year or two, you can still be a homeowner again and on better footing.

[gurumama]

So you have a chance to get out from under an investment that is negative $75K, that you pay a 9% interest rate on, and you can walk away without paying a penny to get out from under such a huge mess?

No offense, but is this really a question? I'd get out ASAP and be on my knees thanking whatever deity you believe in that I got a chance like this.

Go rent something nice and affordable, save up again and buy when your finances are as solid as possible.

[pumpkin]

I love being in my own home instead of a rental.

I would ask one question. Can you sell the house to someone else for more than they are offering? It sounds like the answer is no.

In your situation I would sell. You can't afford the house. Rent for awhile. Save up and get something more modest and with a better interest rate.

[mamabain]

looks unanimous: get out now!

[Ruthiegirl]

Take the deal.

[Ola_]

Did you put down a downpayment when you bought it?

[maciascl]

No owning a home is not all it is cracked up to be. I was unhappy in rentals because I couldn't do things I wanted to with the house, but now that I own the house I can't afford to do the things I want to the house. It is a no win, atleast for us. I would take the deal & run like the wind. If nothing else put that extra $500 a month away to save for a down payment in a few years if you feel like you really want to own a house again later on.

[MommyKelly]

Originally Posted by Ola_

Did you put down a downpayment when you bought it?

Nope. I know the smart thing to do is to get out. Also considering we live in a city we hate. I think I would worry less, if we had less kids. We have 7 at home, so I guess I worry about finding someone to rent to us.

[MommyKelly]

Originally Posted by maciascl

No owning a home is not all it is cracked up to be. I was unhappy in rentals because I couldn't do things I wanted to with the house, but now that I own the house I can't afford to do the things I want to the house.

This is us! And it needs work. We bought it as is, as a fixer upper. Not realizing that we would soon be so house poor, it would stay as is.

[Noelle C.]

We'd love to be paying 41% of our income to housing. Right now, we're paying about 80%. And this is typical here. If we could be payin 41% and have the opportunity to save another $500, I'd be crying from joy.

[kittenwhip]

Originally Posted by hopefulfaith

What a perfect opportunity to get out and start over. Unless it is absolutely the perfect place for your family, I'd go.

I totally agree. It sounds like this is the perfect opportunity to get out of what could become a huge financial mess.

[Logan's Mom]

Originally Posted by MommyKelly

Nope. I know the smart thing to do is to get out. Also considering we live in a city we hate. I think I would worry less, if we had less kids. We have 7 at home, so I guess I worry about finding someone to rent to us.

I'd take the deal and run. I'd start looking into rentals asap but its none of their business how many children you have. You could always look at the place while someone watched the kids. I think you may have to include them on the application, but its illegal for them to not rent for you because of your children (which I know would be hard to prove.) YOU CAN DO IT!!!

[Drummer's Wife]

Originally Posted by MommyKelly

Nope. I know the smart thing to do is to get out. Also considering we live in a city we hate. I think I would worry less, if we had less kids. We have 7 at home, so I guess I worry about finding someone to rent to us.

see, I was thinking heck, yes - you should sell the house back for sure. BUT, with 11 people in your family, will you be able to find a place to rent? IME, even with 4 kids, it can be a challenge. Every place (besides one crummy apt) we have rented from had rules about how many people you were allowed to have per bedroom. I would guess you would need to find a 5-6 bedroom house, and even then, when you list all the members of your family it's possible they would not rent the house to you, b/c of the # of children. IT stinks, but sometimes that's the reality. Do you know anyone personally who is looking to rent their home out? That would be the way to go, IMO, over trying to find a home owned by someone you don't know, or a management company.

The thing is, most leases require you to list all family members who will be living there - so it's not as easy as saying you only have 3 kids. I wouldn't recommend lying.

[sunshadow]

We are in the same boat and if we had the opportunity we would jump on it! I would get out for sure. You might end up ahead someday if you stay, but it's going to take years and years and in that time you could save so much for another house that you can better afford. If we sell now we will lose at least $60k plus the fees, which are really high were we live. So we are stuck. We could only dream of having your chance.