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I have a question for you RE professionals out there. I'm really in a bind - not sure what to do. We bought our house in 2006 for a good price (I'm in FL) and since '06, it has depreciated about $135k. It is now worth about 75k less than what we owe on it currently.
So I am in RE too, but not in sales. I'm about to lose my job. Long time coming - knew it would happen - just the economy and current conditions we are in will not allow my employer to keep me (and others in our position) around.
So I already had a job offer in another state in the Southeast. I'd take it for sure, but cant sell our house. I'm looking into our options. Our neighborhood is "foreclosure city" ... we are surrounded. And I think it will continue for another year or two. I think a lot of the folks that bought at 2005-06 prices will most likely walk away from their house. Our area is very transient, with a lot of people from up north who moved here intending to flip the home. And now many are walking away (and I believe) will continue to do so. I think we have probably 6 or 7 foreclosures on our street which consists of probably 25 - 30 homes.
There have also been a few violent crimes in our area, which to many, would probably seem odd since homes in our area were in the mid $300k's and $400k's - but this is what has occured to many parts of FL unfortunately. Riff raff and crime coming into nice areas. That is also (the riff raff) a concern of ours. There was a guy that got killed in a nice neighborhood similar to our's recently. Drugs and criminals have creeped into some of our nicer areas.
So what are we to do? Have job offer in another state, about to be unemployed here in FL, owe $75k more on our house than it's worth. Tons of foreclosures around us which will continue to bring down the value. We thought about renting it out but we could only get about 2/3 of what our actual mortgage is, so we'd be coming out of pocket like $600 every month. And we'd be in another state so we cant be there to make sure things are taken care of. We have very good credit (high 700's to low 800 beacon scores) and I want to have my own business eventually - same kind of work I am doing now but I want to be on my own. But I dont wanna mess anything up (credit-wise) too bad and obviously a short sale or foreclosure would.
Hire a licensed property management company (interview several) and try to rent the home as long as you can. Personally I would avoid a short sale or foreclosure until I had exhausted every possible alternative. Good luck to you.
Your only options are to rent it or do a short sale. You are in the same boat that many Floridians have been in for a couple of years. You have no easy choices here. Your choices are to hold your credit intact and take a loss every month, or to be done with it and go for a short sale. The question isn't what your options are. The only question is which of the the lesser of two evils for your particular situation will you take.
This is just another way to look at it. Using your numbers, I'm guessing you're mortgage is $1800, so you'll be losing $600 per month. If you can find a place to rent at your new job's city for $1200, the amount you'd be paying each month for housing would be the same as you're currently paying ($1200 for the new place + $600 loss = $1800).
Thx Siverfall, KonaKat. Silverfall, if you were me, what would you do?
I would rent it. My credit is important to me as a business owner. I would do exactly what SteveP suggested which would be to rent a house/apartment for less than $1200 a month which would keep me at the same level, but honestly I would try and rent for as little as possible to get a decent place. The fact is as a rental you will have tenancy losses so you'd want to compensate for that with paying less rent on the other end. If I could rent for $900 a month and save $300 a month for rental losses I would do that.
I would also call my lender and see what kind of loan modification they would do for me. Even if they only dropped the interest payments for 1-2 years you would save a lot of money in the meantime.
If you want to launch your own business at some point then I would keep your credit intact. I say this as having my own brokerage that access to credit is essential if you are going to launch properly. It is not cheap to launch a business well.
Keeping it as a rental may provide you some tax deductions. Basically your rent losses, depreciation, and repairs, etc. Might mitigate the shortage a bit.
I say 'may' provide because it depends on factors such as how large the loss is and your current income.
^^^ It's for my GC license, but I'm sure very important to have (and keep) good credit. On one hand I want to just let it go and be done with it, but morally, my wife and I dont feel comfortable doing that to our neighbors.
silverfall and stevep, thanks again for your opinions. We have tried to remodify our loan, but since we got a 30-yr fixed rate of 6% (and not some crazy loan like some people got), banks wont help us, atleast not our bank. Maybe if I said to our bank, "we are going to let this house go into foreclosure unless you help us out." Worth a try?
^^^ It's for my GC license, but I'm sure very important to have (and keep) good credit. On one hand I want to just let it go and be done with it, but morally, my wife and I dont feel comfortable doing that to our neighbors.
silverfall and stevep, thanks again for your opinions. We have tried to remodify our loan, but since we got a 30-yr fixed rate of 6% (and not some crazy loan like some people got), banks wont help us, atleast not our bank. Maybe if I said to our bank, "we are going to let this house go into foreclosure unless you help us out." Worth a try?
I would see if they will drop the interest rate to 3-4% for just one to two years. Try and negotiate a drop of any kind...even temporary. I would focus on the temporary part with the bank. Explain your current hardship.
^^^ It's for my GC license, but I'm sure very important to have (and keep) good credit. On one hand I want to just let it go and be done with it, but morally, my wife and I dont feel comfortable doing that to our neighbors.
silverfall and stevep, thanks again for your opinions. We have tried to remodify our loan, but since we got a 30-yr fixed rate of 6% (and not some crazy loan like some people got), banks wont help us, atleast not our bank. Maybe if I said to our bank, "we are going to let this house go into foreclosure unless you help us out." Worth a try?
That would be an idle threat - don't waste your time. KonaKat, Silverfall and Steve have given you the best advice, I'd follow it asap.
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