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I've been doing tons of research on the interwebs, but I can't find anything that really fits our situation, so I'm hoping that someone here can give me a little insight.
My husband's company is relocating us from Chicago to Atlanta. We moved here almost two years ago when they relocated us from NY (we thought we would be here longer, but his company was bought and now it's the new company that's relocating us to Atlanta). We got an FHA loan to purchase this home, so as you can imagine, we don't have much equity. None, actually, because housing prices continued to fall after we bought. We met with our realtor and with a good sale price, we'd still have to bring around $40k to the table at closing. Which we don't have.
Ideally, we want to buy in Atlanta. I'm currently on unemployment, and with that and my husband's salary, we'd be able to carry both mortgages until the Chicago house sold. With just my husband's salary, we could, but we would have very little left over for food, gas, etc.
My first question is: does FHA count unemployment income when approving a loan?
Okay, say they do and we're able to secure a loan for a home in Atlanta. Chicago home is on the market. It gets an offer that is obviously below our mortgage balance. Do we short sale then? Is that considered a buy and bail? What if we don't get any offers, my employment runs out and I haven't found another job, yet, and now Chicago house becomes a financial hardship? Is THAT a buy and bail? We don't want to do anything unethical, but we want to know if we can have our ideal situation.
I talked to our lender briefly and they weren't much help. She made it sound like we could buy in Atlanta, try to sell the house at the mortgage price, and then short sale down the line, but she wasn't very clear.
We've also considered renting our Chicago home out (at a loss) using a property management company, but we really just want to be rid of it.
If worse comes to worse, we'll rent in Atlanta while we try to sell the Chicago house, and I guess our credit will just take a hit when it ends up being a short sale (which is why we wanted to buy first so we don't have to wait two years to buy again).
If anyone could let me know if our ideal situation is doable (i.e. not illegal), please let me know! Oh, and to make this a more stressful situation, they want my husband there in March. MARCH!!!
1. Rent the house in Chicago to the party who has the best credit and references, try to get them to sign for a two year lease.
2. Rent in Atlanta (assuming that you don't have kids and aren't worried about schools) the smallest cheapest place you can find.
3. Save money and decide if you really want to buy in Atlanta (and where).
You might be surprised that being a landlord isn't all that bad and that you can hold the property in Chicago until the market recovers enough to turn a tidy profit. To eventually buy in Atlanta you may need over 20% down and show the ability to cover the Chicago mortgage for 6 months (often the money in your 401K can count towards this).
yeah sounds like buying a second home right now wouldnt be a good idea. Id rent someplace first and deal with the chicago house before buying another one, if you are kind of tight on $. Good suggestions above on renting.
Does your Relocation package include housing? Sometimes if the employer has a housing benefit within the relocation, they will actually buy the home you are vacating, and then it sells when it sells, for whatever amount, and you do not take the equity or the credit hit.
I would not advise that you become a landlord for the first time, with a property that is so far away. Doesn FNMA own your mortgage? What are the terms?
A Short sale will push you out of ownership for 2-3 years depending on the circumstances.
You cannot use Unemployment benefits to qualify for a mortgage in any way.
Thank you for all of the replies. My husband is going to try to negotiate a relocation package like you described, on the advice of his prior boss. So we'll see how that goes. If not, I think we've resigned ourselves to renting in Atlanta while we short sale this house.
Renting out our current house will just be too much of a loss for us. We'd have to utilize a property management company, since we've never been landlords and will be in another state, plus we wouldn't get enough to cover our mortgage. Also, the housing market here is not that great, not showing any signs of improving, and we are out in the far suburbs with ridiculously high property tax rates that no one wants to pay. And if I remember correctly, I think our realtor told us that since it would no longer be our primary residence, we wouldn't even get to claim it on our taxes.
I've been doing tons of research on the interwebs, but I can't find anything that really fits our situation, so I'm hoping that someone here can give me a little insight.
My husband's company is relocating us from Chicago to Atlanta. We moved here almost two years ago when they relocated us from NY (we thought we would be here longer, but his company was bought and now it's the new company that's relocating us to Atlanta). We got an FHA loan to purchase this home, so as you can imagine, we don't have much equity. None, actually, because housing prices continued to fall after we bought. We met with our realtor and with a good sale price, we'd still have to bring around $40k to the table at closing. Which we don't have.
Ideally, we want to buy in Atlanta. I'm currently on unemployment, and with that and my husband's salary, we'd be able to carry both mortgages until the Chicago house sold. With just my husband's salary, we could, but we would have very little left over for food, gas, etc.
My first question is: does FHA count unemployment income when approving a loan?
Okay, say they do and we're able to secure a loan for a home in Atlanta. Chicago home is on the market. It gets an offer that is obviously below our mortgage balance. Do we short sale then? Is that considered a buy and bail? What if we don't get any offers, my employment runs out and I haven't found another job, yet, and now Chicago house becomes a financial hardship? Is THAT a buy and bail? We don't want to do anything unethical, but we want to know if we can have our ideal situation.
I talked to our lender briefly and they weren't much help. She made it sound like we could buy in Atlanta, try to sell the house at the mortgage price, and then short sale down the line, but she wasn't very clear.
We've also considered renting our Chicago home out (at a loss) using a property management company, but we really just want to be rid of it.
If worse comes to worse, we'll rent in Atlanta while we try to sell the Chicago house, and I guess our credit will just take a hit when it ends up being a short sale (which is why we wanted to buy first so we don't have to wait two years to buy again).
If anyone could let me know if our ideal situation is doable (i.e. not illegal), please let me know! Oh, and to make this a more stressful situation, they want my husband there in March. MARCH!!!
Renting in atlanta is not a worst comes to worst situation, you would be better off renting first in your move. Any time you move to a new area you should rent first to get to know the area before you buy. Take it slower. I'm not sure why there is always such a rush to buy, especially with the predicament that buying put you in last time. Also, is there a possibility that you could be relocated again in the future since you've already been relocated? If that is likely, that is another reason to rent.
Are you sure you can't afford to rent out the Chicago house?
Being a landlord is really not that hard and honestly there isn't much a property mgmt co will do that you can't do for yourself.
There are a lot of tax benefits for landlords so I don't know what your realtor was talking about. Even if the rent is a few hundred below the mortgage you may break even or better with the tax deduction. And you won't be trashing your credit with a short sale. A lot of employers check credit now so this could be an issue looking for a job later.
If you can renegotiate the relo package that is best though.
Good luck!
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Bit the bullet
