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Old 01-20-2014, 04:06 PM
 
3 posts, read 4,084 times
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Hi,
Trying to get some advise and stategy. I currently have a mortgage on a house that is upside down by about $30,000, and i also own a house with no mortgage which is worth more than the house with mortgage. Ideally i would like the sell the house with mortgage which is unoccupied right now, but dont want to take that heavy loss. My other option can be to rent it, but a monthy payment wouldn't pay the monthly mortgage entirely. I guess what im asking is there a way to unload the house without taking as big of loss? Or is there a way to use the equity in the other house to get a lower interest rate or lower the monthly payments to make renting worthwhile?
Any suggestions is greatly appreciated.
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Old 01-20-2014, 04:53 PM
 
Location: Northern Fairfield Co.
2,645 posts, read 2,176,925 times
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Which CT town is the underwater property located in? Would help to know before offering my opinion . . .
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Old 01-20-2014, 05:02 PM
 
Location: Central CT, sometimes NH.
3,256 posts, read 4,914,906 times
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What's the interest rate and remaining term on the other house? If it's substantially higher than the prevailing rate then you might be able to take a fixed equity loan on your current home and reduce monthly expenses to make the rental option work.

If you want to sell its pay now or pay later. Sometimes you just have to take the loss and move on.
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Old 01-20-2014, 05:20 PM
 
Location: Virginia
475 posts, read 693,698 times
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Strategic Defaulting
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Old 01-20-2014, 05:21 PM
 
Location: Fairfield, CT
5,541 posts, read 8,202,280 times
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Lots to consider.

$30K under water isn't a particularly huge amount. Can you rent it out at a profit or would it be a loss? What kind of interest rate do you have on that loan?

You could borrow against the house with no mortgage and pay down the underwater house's mortgage. What are the relative values of the houses? You should be able to get a good rate if your credit is good and you'll have at least 20% equity.
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Old 01-20-2014, 06:01 PM
 
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If you mortgage your other house to pay off some of the mortgage to make renting feasible, you're still "taking a loss"--it's just that you're amortizing the loss over years and paying interest on the loss. It's basically the same as selling the house, except you don't take the hit all at once. That may be a good option for you, but you should understand that it's possible/likely to cost you more in the long run.

Defaulting, as someone suggested, isn't a great option--in addition to ruining your credit, you're likely to fare much worse. Since you have assets (your house without a mortgage), the bank(s) have fair shot at collecting any judgment against you, and are likely to pursue one.

If you expect the value of the home to rise in the next few years so it won't be underwater any longer ($30k on a $500k home is much different than $30k on a $200 home in this respect), your best bet may be to rent and take a loss for a few years. You're still amortizing the loss over years, so not taking a huge hit. Then you can sell in a few years.
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Old 01-20-2014, 06:13 PM
 
4,503 posts, read 4,184,571 times
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Quote:
Originally Posted by mrgmrg View Post
If you mortgage your other house to pay off some of the mortgage to make renting feasible, you're still "taking a loss"--it's just that you're amortizing the loss over years and paying interest on the loss. It's basically the same as selling the house, except you don't take the hit all at once. That may be a good option for you, but you should understand that it's possible/likely to cost you more in the long run.

Defaulting, as someone suggested, isn't a great option--in addition to ruining your credit, you're likely to fare much worse. Since you have assets (your house without a mortgage), the bank(s) have fair shot at collecting any judgment against you, and are likely to pursue one.

If you expect the value of the home to rise in the next few years so it won't be underwater any longer ($30k on a $500k home is much different than $30k on a $200 home in this respect), your best bet may be to rent and take a loss for a few years. You're still amortizing the loss over years, so not taking a huge hit. Then you can sell in a few years.
Good advice here.

If you already have a 1st home that's paid off, you definitely do not want to default on the second home.
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Old 01-20-2014, 08:59 PM
 
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Located in wolcott. Interest rate is 5.25 on mortgage of 190,000 remaining. House without mortgage worth about $270,000. Would prob be taking about $300-$400 loss a month now renting it out. Thanks for the responses
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Old 01-20-2014, 09:46 PM
 
Location: CT
2,122 posts, read 1,745,909 times
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Quote:
Originally Posted by Cor0043 View Post
Located in wolcott. Interest rate is 5.25 on mortgage of 190,000 remaining. House without mortgage worth about $270,000. Would prob be taking about $300-$400 loss a month now renting it out. Thanks for the responses
Are you positive you can't get any more money as a rental? Like was said above, you can amortize your loss through rental, can you not mitigate that loss by asking for another 100/month or even the 3-400?
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Old 01-21-2014, 06:52 AM
 
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I might be able to get within a few hundred of mortgage, but dont think the whole thing.
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