A little over 2 years ago, at the height of the market, I brilliantly opted to take a second out on my 1st home in order to put a down payment on my current place with plans of renting out my 1st as an investment. I kick myself now for not reaping the rewards and selling the place, but that’s life, right? Although I’ve had renters in the house for most of the time, the rent does not cover the mortgage. And now the house is worth far less than what I owe on it (I tried to sell it a year ago when I could have broke even to no avail). Although I have made every payment on time, and could probably afford both properties, I could not do so without putting a serious damper on the wife and I’s financial situation, even making us postpone starting a family because of the costs involved (we are both 30). I just don’t think keeping the investment property is worth the problems it is sure to cause. I realize I brought myself into this mess, but am now looking for a potential way out. Is a short sale a good option? Can they come after my other assets (current home, etc.)? Should I try and hold on to the place by possibly attempting to negotiate the loan into a 40 year or other? The current loan is set to readjust in a couple years and I am currently paying the interest only. Sorry such a long post, but any help would be greatly appreciated. Thanks.
I know this is not what you want to hear but…
MAN UP! Walking away from an obligation is not only bad business and will hurt your credit, it is wrong. Especially when you can make the payments.
Sucking it up now and doing what is right will help build your character instead of tearing it down. It will take you longer to rebuild your self esteem and character than your savings account or credit.
Your options are:
- Continue to rent and cover the difference until the market comes back then sell.
- Sell the house, take a loss and move on.
- Find a creative way of selling the house that might make the numbers better. Lease option/lease purchase or the like.
- Sell your current house and move back into the overpriced one when the lease is up.
- Talk with the bank and try to refi or modify the loan.
- Be a weasel, turn tail and run, get a foreclosure on your credit. The bank will likely come after you since you have other assets and you can loose those as well.
Sorry to be a hard XXX but sticking someone else with your problem is a bad plan.
I’m sorry for the previous post. That was bit of pent up frustration or must be something else that has him in a bad mood.
We have handled hundreds of cases like yours for our clients and I can say that you do have several options. There are ways to lower your payments and there are ways for you to be able to short sale the property with minimal to no affect. No results are typical but we have only seen that by acting proactively on their behalf will always leave them in the best place possible.
The issue is that you have already gotten into the mess. You need to sit down with a professional. Plot out your goals. Look over your finances. If you need any assistance feel free to private message me and we could discuss your case in further detail.
Your looking for answers which are complex and at the end of the day only you will know what’s best for you but with the assistance of a professional it could really get you to where your are going.
Best of luck.
You can try a short sale but the lenders won’t do anything until you are in default and then you will have to prove that you can’t afford the payments. The lender will check credit and bankaccounts etc. I would try and negotiate the terms for a short term solution until you can sell.
I’m sorry and I mean this with no disrespect.
Do not listen to the previous poster. This is a common misconception in the industry. We have helped hundreds of homeowners in this same position and there is no need to be behind.
I can not speak for the previous speaker’s experience but I can say is that I myself used to work for one of the largest lenders in the US, if not the largest lender (saw that on TV in a new report – but we all know that the news doesn’t always represent the whole truth), and have run across 30,000+ cases in my life time. I can not say that they have all been Short Sales but a plethora of the mortgage solutions market (large part are Short Sales and Short Refinances) hitting just about every product. I can whole-heartedly say that we are always working these types of arrangement for our clients and there is no need to be behind. It doesn’t even matter what your lender says because it is not up to them it is up to the investor. At times that can be one and the same but make sure that you are talking to the right departments. If you don’t feel up to we would suggest to contact a professional that can help you.
Ex:
Bob gets a new job.
Bob has to move.
Bob has to sell his house as he can not keep it or rent it.
Bob does not choose the market in which he sells his home.
Bob is not behind but still needs a Short Sale.
Ergo Short Sale is Reviewed.
Now this does not mean that the Short Sale will automatically be accepted because that depends on the offer. If the offer comes in at Fair Market Value and many other determining factors. BUT, with that said the account will be reviewed.
Don’t believe the hype that you will find on the web. This is all verifiable with the correct people at your lender. Consult a professional if you have trouble.
Best wishes,