Mothering Forum banner

1 - 10 of 10 Posts

·
Registered
Joined
·
3,169 Posts
Discussion Starter · #1 ·
Long story short, we bought our house 2.5 years ago, before I was pregnant or had any children. We bought KNOWING i would continue working regardless of the baby situation (took us over 3 years to get pregnant). Now DD is 18 months and I will not be returning to work.... forever.<br><br>
We live in an expensive area and our house is more than 40% of DH's income (just the mortgage, not including taxes and insurance). Not to mention that we are under water by more than $150,000. Our lender will not modify or refinance.<br><br>
Our families live in a much more affordable area of the state and we could buy some land and a house for less than 1/2 of what we paid for our current house.<br><br>
I want to short sale and move into a rental until we save a big chunk for a down payment, but then we lose the tax benefit of this house (we are an interest only loan). It is true that the market could go back up within a few years, but that is a few years of not saving.<br><br>
What do you all think?
 

·
Registered
Joined
·
5,903 Posts
Look at some of the other posts about SS. They are not as 'easy' as they appear. Has your bank approved you for a SS? If you do a SS what makes you think another lender is going to approve you for a loan in this other area of the state? If the SS goes through who is responsible for the remainder of the loan?<br>
Why can't you go back to work, work from home?<br>
It sounds like you are making the payments just fine. What buyers need to realize is real estate is an investment, just like stocks, bonds, funds etc and there is a risk involved. Real estate can loose money... There is no guarentee the bank is going to want to 'eat your loss'. (then give you another mortgage on top of that)
 

·
Registered
Joined
·
3,169 Posts
Discussion Starter · #3 ·
We have not even started the process. Our lender told us the steps and we have not made a decision yet.<br><br>
If we did SS, we would rent for several years to save up a down payment for another house in the area we want to end up. I know this is not a quick process either way.<br><br>
We are not having any problems now paying the mortgage, but the payments will increase substantially in 7 more years. We will be struggling then for sure. We are very frugal now.
 

·
Registered
Joined
·
792 Posts
We also bought at the peak and got an interest only loan, zero down payment, and our value of the house dropped by over $200,000. I at first wanted to do a short sale, but my husband analyzed the situation and said that it would be in our best financial interest to let the house go into foreclosure. Basically because short sales already mess up your credit, and we wouldn't have any savings money anyway to buy another house, and we don't need to borrow money for anything anyway with us already having 3 cars and my husband making good money. So, we decided to do a foreclosure, so that we can save lots of money by living here for free for about a year or more, while we pay down our other debt (mostly car debt for his $30,000 racing car, and he has student loans), with the money that we save. Luckily, my parents are handling my student loans, but if they don't pay it off we'll owe that money too, so its helping a lot to save all this money while not having to pay any mortgage or rent for a year. That is our analysis from a financial perspective, which looks at what is in the best interest of our family.
 

·
Registered
Joined
·
2,183 Posts
What would your DH do for work from the lower cost of living area? Are there jobs to be had there? Or would he be able to commute?<br><br>
Would you have any money to buy a house in the less expensive area? Is that assuming you'd be able to get credi/a mortgage again? I'm not sure I'd assume that.<br><br>
Why are your payments going to increase in 7 years? Is there any way around that?<br><br>
I know they keep saying that the banks MUST work with homeowners, and it must be frustrating to hear and then have them tell you no. There was just a huge case in the news here (NYC area) of a judge censuring the mortgage company for not working with a couple, etc--things might be getting better.
 

·
Registered
Joined
·
792 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>madskye</strong> <a href="/community/forum/post/14744053"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">Why are your payments going to increase in 7 years? Is there any way around that?</div>
</td>
</tr></table></div>
That is the same with us. The OP said that her loan is interest only, and it sounds like its the same as our loan where its interest only for 10 years, and then you have to start paying principal. Any way around it? I don't think its possible to avoid paying principal. That is a big reason why we are letting go of our house. We wouldn't be able to afford it anyway in a few years.
 

·
Registered
Joined
·
5,903 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>Chloe'sMama</strong> <a href="/community/forum/post/14743764"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">We have not even started the process. Our lender told us the steps and we have not made a decision yet.<br><br>
If we did SS, we would rent for several years to save up a down payment for another house in the area we want to end up. I know this is not a quick process either way.<br><br>
We are not having any problems now paying the mortgage, but the payments will increase substantially in 7 more years. We will be struggling then for sure. We are very frugal now.</div>
</td>
</tr></table></div>
Alot can happen in SEVEN years.... honestly, if you are making payments just fine I wouldnt even consider a SS now (and the bank analyst probably wont either). In 7 yrs that market can recover... who knows....
 

·
Registered
Joined
·
4,964 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>zebra15</strong> <a href="/community/forum/post/14743347"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">If the SS goes through who is responsible for the remainder of the loan?</div>
</td>
</tr></table></div>
In CA, homeowner walks away with short sale and bank can't come after them for more.
 

·
Registered
Joined
·
1,421 Posts
<img alt="" class="inlineimg" src="http://www.mothering.com/discussions/images/smilies/headscratch.gif" style="border:0px solid;" title="headscratch">
 

·
Registered
Joined
·
3,135 Posts
<div style="margin:20px;margin-top:5px;">
<div class="smallfont" style="margin-bottom:2px;">Quote:</div>
<table border="0" cellpadding="6" cellspacing="0" width="99%"><tr><td class="alt2" style="border:1px inset;">
<div>Originally Posted by <strong>ThereseReich</strong> <a href="/community/forum/post/14744085"><img alt="View Post" class="inlineimg" src="/community/img/forum/go_quote.gif" style="border:0px solid;"></a></div>
<div style="font-style:italic;">That is the same with us. The OP said that her loan is interest only, and it sounds like its the same as our loan where its interest only for 10 years, and then you have to start paying principal. Any way around it? I don't think its possible to avoid paying principal.</div>
</td>
</tr></table></div>
No, and there shouldn't be - the idea of a mortgage is to pay for the house eventually. But suppose you got a lower interest rate on the mortgage. Then you could pay the same amount as now, but part of it would pay for interest, and part for principal, right?<br><br>
I mean really those interest-only mortgages don't make sense (at least not to me). It would be great if lenders would work with the (willing) homeowners who have them to modify the terms a bit...
 
1 - 10 of 10 Posts
Top