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Not to turn this in to a renting thread, but there are obviously other costs to consider as well. Think about all of the maintenance that may be required. And you have to factor in periods of vacancy. Or the expense of evicting a deadbeat. Or the expense of suing a tenant that did $20K of damage to your house. The list goes on.
Saying the loss would only be $200 a month sounds nice, but that is probably not the reality of the situation. And sure write-offs are nice, but that is only getting you about 25cents on the dollar back.
Thanks for all the great responses, I greatly appreciate the feedback.
I just learned something that makes me feel better about staying in my current home. The school district itsself has good schools and bad schools. I happen to be located near a bad school. I learned that I can submit a student transfer request to send my children to another school besides the one we are assigned to. The catch is that it isn't guranteed and you have to submit the request every school year.
Renting my home is still an option. I've been researching and I think I understand the risks. I'm not too worried about maintenance costs. The house is well maintained. All of my appliances and HVAC system have been replaced since I moved into the house. The main problem will be finding a good tenant and keeping the home occupied. I just need to figure out if I want to deal with the hassle of being a landlord.
Honestly, given what you just posted above about the school choice, just stay put. Your kids sound young enough that it shouldn't be an issue, just stay invloved and ask questions, attend meetings etc. Hopefully the market will rebound a little in a few years and you can move to your "dream" location. With $60K in savings already, staying put will allow you to continue to save and continue to pay down your current debt. If your place is feeling cramped, have a tag sale. You'd be amazed how much stuff you don't really need when you look around....
Actually, I was not thinking along those lines. Just that they could rent it out - the lender for the new house would want to see proof.
I didn't mean to imply that was what you were thinking. But it wouldn't be too hard to find a renter and then simlply not pay your mortgage. Or pay it for a year and then stop.
OP you can't do a short sale and then buy another house. Doesn't work that way. So that option is out. Also, someone suggested doing the buy and bail, which is also a form of strategic default. Fannie just announced that they won't buy loans from strategic defaulters for 7 years after they walk away AND if you are in a deficiency state they will come after you for the deficiency.
Another option is to talk to a lawyer. You may be able to negotiate a release from your contract with the bank. It doesn't seem like a good move financially to waste 60K in savings to pay off the loan especially considering you still would be under water on your mortgage. And then you have no money left after that. What good is that for you and your family?
The below link talks about going to an attorney in your situation. There are some other interesting links on there too in the story. But I think depending on how much you earn and how many assets you have, is your credit worth 100 thousand dollars? I don't know the answer to that. But it is something the article questions. I'm not sure how difficult life will be after with a credit hit. One thing though you'd probably have to wait to buy another home and rent. Which may not be such a bad thing as the market is still continuing to decline.
There are some posts I think I read in the finance forum and some other places that people who had a short sale , their score only dropped 100 points and if they had an 800 score, they are now at 700 which is still excellent.
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