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I am so desperate!!! My husband and I and our 3 kids PLUS my elderly mother are living in a 5600 square foot house that we bought as our "forever home" back in 2007 for $550k. Now it is worth about $430-$450k.
This would not have been an issue if we could stay. Even with 2 mortgages totaling $475k, we could have managed due to a 2 year restructuring by our second mortgager that is saving us $375 per month and a modification that has been dragging on with our primary mortgager (Bank of America) for the past 6 months that is projected to save us another $350 a month or so. This would mean that our mortgage payments (including interest and taxes) would be reduced from $3,760/month to just under $3,000, perhaps even close to $2,900/month.
This is all hunki-dori till you factor in the unfortunate timing of my husband's job loss in April, which lasted a full month, and his only option to accept a job in Raleigh (we reside in Charlotte, a 3.5 hour commute). So all this summer he has been commuting to Raleigh weekly, renting a room there and coming home on weekends. This is costing us about the same amount of money all the restructuring and modifications were projected to save us! So our expenses outstrip our income by nearly $1,000 STILL!
We tried to put the house on the market in the spring, as soon as my husband lost his job, but Bank of America forced us to take in OFF the market a week later because they claimed we were not allowed to be selling our house during the process of refinance !! (at that time they were trying to pull off a "home affordable refinance", but this fell through after TWO months because the secondary mortgager, PNC, refused to subordinate if B. of Am. increase our loan amount with closing costs.... can you blame them!?)
So we lost out on the highest selling season in the real estate market, while awaiting a futile refinancing process....
B. of Am. then switched gears and grudgingly initiated a loan modification, with has dragged on and on and on... supposedly we are to be approved and on our way with a modified loan in the next "30-45 days"... like I haven't heard that before.
Anyway, like I mentioned before... even if all this modification business goes through, the added travel expenses we are incurring with the new job in Raleigh are putting us back to square one financially speaking.
Add to that the psychological stresses of an absentee father all week long who misses his kids as much as they miss him... well, it just is not working for us!
We HAVE to move.... we can not afford this home any longer with the traveling costs. We have dug ourselves into a $30k credit card debt hole due to the lower income over the past year, the loss of income during unemployment, and the increased expenses since he started working in Raleigh in May.
So here is the bottom line on our house:
Worth (what it could reasonably be sold for today, and actually have a buyer!): $430-$450k
What it is worth on an appraisal report: realtor appraisal = $480k
(so supposedly we are not officially "upside-down")
What we owe: B. of Am. = $404k plus PNC (second mtg.) = $70k for a total of around $474k
commission and closing costs = approximately $35k-40k
Current realtor-set list price = $529k to include what we owe($474k) + load costs ($40k) + wiggle room for negotiation ($15k)
NOW... I want to reiterate that I am perfectly aware of the fact that this list price is over market... hence NOT ONE SHOWING. Not to mention that very few buyers are looking for such a huge house ON the golf course. So our target market is miniscule.
We are responsible home owners and debtors... we poured everything into this house at the get-go... we had no cc debt, car payments, student loan payments... NOTHING but the 2 mortgages when we started out here in 2007. Currently we have over $30k in debts and growing (we are in the red at least $1000/month), our 10 year old van is about to kick the bucket, and we HATE our neighborhood.
So, finally we get to the gist: WHAT WILL HAPPEN IF WE APPROACH PNC (OUR SECOND MORT.) AND TELL THEM WE CANNOT DO THIS ANYMORE?
Do we have to have a buyer before we can stop paying and go into shortsale status? Because I honestly think that no one will want this house, even at an extremely low price. And we cannot place the house on the market with a price tag below what we owe if we do not have permission from the bank, right?
We have also place the house on the internet for rent, and even reduced the rental price to $500/month BELOW what it will cost us with the MODIFIED payments ($2,495)! NO ONE IS INTERESTED!!! NOT A ONE!
We have looked into me going to work, but with one profoundly gifted child at home being homeschooled, I cannot go out for more than a couple of hours a day, which will bring in far less than what we need to make ends meet.
I am scared to ask the bank for advice, because once they know our predicament, they will shut down the unfinished modification process.
So PLEASE!!! Any wise advice out there, especially from financial professionals who actually have a clue about the bank's likely response and the REAL options for us out there, would be GREATLY appreciated!!!!!!
You need to talk with an agent that does short sales. That seems like your best bet at this point. You do understand that if you short sell your home that you can't buy a new one in Raleigh, right? I can DM you some names of folks in Charlotte to talk to if you want.
I'd also get on the phone to your credit card and see about reducing your interest payment. Sometimes if you agree to stop using the card they will reduce the interest payments and put you on a payment plan.
yes thanks... I would appreciate some local council...
I do realize that our credit would take a huge dive (it's above 700 now, but would fall as we start to get behind in cc and mortgage payments anyhow), and we plan on renting for a couple of years to get a feel for the new area.
That is what we are weighing right now... do we go deeper and deeper into debt every month, and live a life apart? or do we walk away from this house, incur damage to our credit, live frugally and be together?
Except for the fear of the unknown, the answer seems obvious... a year apart is a year we can never get back... credit we can build up again, and home we can make wherever... but time... that's something you cannot recoup.
But how to go about it and is there anything we have not discovered yet... that's my dilemma.
This is all hunki-dori till you factor in the unfortunate timing of my husband's job loss in April, which lasted a full month, and his only option to accept a job in Raleigh (we reside in Charlotte, a 3.5 hour commute). So all this summer he has been commuting to Raleigh weekly, renting a room there and coming home on weekends. This is costing us about the same amount of money all the restructuring and modifications were projected to save us! So our expenses outstrip our income by nearly $1,000 STILL!
We HAVE to move.... we can not afford this home any longer with the traveling costs. We have dug ourselves into a $30k credit card debt hole during unemploydue to the lower income over the past year, the loss of income ment, and the increased expenses since he started working in Raleigh in May.
We are responsible home owners and debtors... we poured everything into this house at the get-go... we had no cc debt, car payments, student loan payments... NOTHING but the 2 mortgages when we started out herein 2007. Currently we have over $30k in debts and growing (we are in the red at least $1000/month), our 10 year old van is about to kick the bucket, and we HATE our neighborhood.
We have looked into me going to work, but with one profoundly gifted child at home being homeschooled, I cannot go out for more than a couple of hours a day, which will bring in far less than what we need to make ends meet.
Sounds like you may have aspired to a lifestyle that precluded saving for a rainy day.
Pouring everything you had into your "forever home" in a neighborhood you now hate makes no financial sense. Do you or your husband have a 401K?
There are millions of profoundly gifted children in local schools systems. Home schooling is not an option for most families because lifestyle choices tend to demand dual incomes to support them.
Where does the elderly mom fit into all of this? What does elderly mean? Does she contribute to the expenses? Can she babysit while you return to the workforce, full time?
You are one credit report pull away from being shut down. I am more inclined to think you are headed towards foreclosure and possibly personal bankruptcy, putting your credit deeper into the toilet. This can impact future employment, car insurance premiums and your ability to find a suitable rental.
Attempting to rent out your place for $500 less than what you will need to cover a modified mortgage payment has absolutely nothing to do with what the market will bear for a rental in your neighborhood, at this time.
You can rent this place at current market rates. You can unload the stuff you no longer need. You can join your husband, in Raleigh. You can return to the workforce. You can restructure your credit card debt. You can live with one car. You can make better choices and dig yourself out of this mess.
Seriously consider seeing a financial planner/credit counselor before you do anything else.
Saying a quick prayer for your situation. There are so many people in the same boat. Best of luck. Homeschooling is hard and I commend you for doing it.
I know exactly what we did and I know it was faulty reasoning that led us to this massive over the budget mortgage. We built such a large home only because we HAD to accommodate my 82 year old mother. Few people are only children born to a 41 year old single and poor mother who has health problems. I grew up in poverty away from my extended family who are all in Germany, so my responsibility is great.
The plan seemed solid... housing is a more stable investment than other forms, like the stock market, including 401k (which he did not have, since he was an independent consultant at the time).
And since we had no plans to move, it seemed a low risk option to put as much as possible into the house that had the square footage that we needed and would need even more so as the kids got older.
When we moved into this house we had, through wise financial decision making over several years, the funds to pay off $60k in student loans (no, our parents did not contribute at all), 2 cars, all our credit cards and still have $40k to put down on this house in 2007.
We are not irresponsible numbskulls who did not worry about a rainy day.
We also had to have the extra square footage to accommodate a very difficult elderly mother, who is incapable of babysitting, although she does help with the laundry each week.
The relevance of all this to our current situation is minor... my husband and I developed health problems and have enormous medical expenses, my days are filled with carting my children to school 1 hour away, my mother to doctor appointments and social engagements...
And I have to keep the house staged for the remote chance of a showing.
I have tried to earn money by giving art workshops out of my home and selling my art. This floundered last winter because of the medical issues and overwhelming time commitments for my mother and kids.
And no, there are FEW profoundly gifted kids in public school and for good reason. We have struggle to find my son accommodations but hit a brick wall over and over in this crappy school system of Lincoln County. My son's IQ is in the 160's and he has, at 10 years old, built up a complete chemistry laboratory in the basement to rival any college lab. He sits through hours of college physics lectures over the internet and has already mastered algebra, geometry and trigonometry... it would be like asking a 15 year old to go back to 4th grade and sit through it... hence, no public school is an option for him.
We don't want to walk away from our financial obligations, but we also value our family and our limited time on earth to enjoy each other.
With my husband gone Mon- Friday night (late) I am overwhelmed with the tasks that are tacked onto what most housewives contend with, like maintaining the house and yard... what most husbands do to help run the family and household. When he is home on the weekends, he is exhausted and desperate to spend time with his kids.
I priced my rental price on the market, hence the enormous commitment of swallowing a gap between what it costs us in mtg payments and the listed rent. Not the other way around.
$2,500/mo for a 5665 square foot house in a golf course community is perfectly within range of the competition, but who the hell needs such a large house??? VERY FEW PEOPLE.
And what about the cost of bad credit versus the cost of remaining in this situation? It's not like sucking it up and sticking it out is a financially beneficial decision either! We are getting deeper and deeper into debt... despite our best efforts to reduce expenses and bring in extra income.
And obviously, we cannot do with just one car... he is in Raleigh, remember???
I do need to talk to a credit/financial counselor... but where would I find one? We are not sure where to turn. Any concrete advice on this would be appreciated.
Saying a quick prayer for your situation. There are so many people in the same boat. Best of luck. Homeschooling is hard and I commend you for doing it.
Thanks so much. It is hard... especially when I also have my girls IN school.
There are millions of profoundly gifted children in local schools systems. Home schooling is not an option for most families because lifestyle choices tend to demand dual incomes to support them.
I don't think I have ever disagreed with you, but on this part I do. Both of my kids are seriously smart, but I have a friend whose son is amazingly gifted in math. In 4th grade last year he had a complete meltdown because they were forcing him to work with the class and do 4x4. He couldn't handle the stress of doing math he did in preschool. So...he only went in the mornings and she home schooled him in the afternoon. She fought hard with the school district and next year he goes into 8th grade math at the middle school. There are three other children in the district that will be bused to a middle school for math. So, gifted kids...yes many. Seriously gifted. No, not a lot. 4 out of 40,000 students in our school district...
I totally get where the OP is coming from on this aspect.
I wasn't going to comment, but I couldn't help myself. 5,600 Sq Ft? Because you had to accomodate your 82 year old mother? Come on now. It's like you are trying to justify buying such a huge house on that.
The overwhelming number of households, with children in residence, do not have a stay at home parent. Very few people make enough to support a family on one income without a most serious compromize in lifestyles. June Cleaver has long left the building.
No one needs almost 6000 square feet to accommodate a family member.
Most people do not make enough to pay the utilities bills on such a place.
I know nothing about school districts in your area and take a your word that there are more desirable schools. Committing to an almost 6000 square foot home in an area with less than desirable schools is likely also working against the market value.
The pool of buyer or renters for such a property is substantially fewer than the typical 2000-2500 square foor home. Only way to match this is to lower your asking price.
A 10 year old with an IQ of 160 has most likely outgrown being taught by parents, any parents. That you have found internet options for him is good stuff.
I am very sorry to hear about your medical situation. And that is often the time when people realize they were under insured, against risks.
Since I am hanging by a thread here, what will become of mother? It is not going to be practical tp sustain the space she " required". Living within your means, addressing debt and planning for the future may force you into a rental of less than half the space.
My point, only point, is that you need to align your plans with the realities of your financial situation. I shudder to think that another misfortune could occur and you find yourselves living out of a car, some place.
NC is a recourse state, I believe. This means the lender can obtain a deficiency judgment on the unpaid balance on your current home. Renting out, a short sale, abandoning the home, foreclosure, personal bankruptcy are all options. Your local municipality can refer you to local credit counseling and advise you how to avoid being scammed in the process. Only thing certain is that your life is going to have to drastically change. You may very well have to enter the workforce and perform a job that is not to your liking to make ends meet and better secure your family's future.
Like millions, you are learning the hard way that the American Dream and all that, was just a brief blip in time.
Last edited by middle-aged mom; 09-06-2010 at 02:25 PM..
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short sale folks in Charlotte
