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Hi All,
Please, if you could offer ANY suggestions on my current situation, I would be so grateful.
Husband purchased a house in Michigan for $160,000 about six years ago, basically he purchased it on a 3 year ARM. A few years later he refinanced to a 30 year fixed and ended up owing $165,000. We have now slowly paid it down to about $159,000 currently.
I don't think he should ever have purchased in my opinion, but I'll keep that to myself.
Only two years after he purchased the house he had to quit his job and move to a different state to provide care to a family member. He made the choice to rent out the Michigan property thinking he'd move back there. Life happened, he got a new job in this new state, we met later and now own another house with a $187,000 mortgage and and assessed value of around $250,000.
The time has come to unload the original property, it is in his name only. Sadly due the terrible Michigan market it is worth only $110,000 to $120,000 at this time, and we can no longer find renters that can cover more than 50% of the mortage.
I have about $10,000 cash scraped together so far, and can perhaps borrow another $10,000 cash from my parents. That could still leave me $40,000 short. Do you think there is anyway I can come up with money using our current house? Perhaps some type of home equity loan???? The current renters are done in November 2011. The choice is, put new renters in the house for another one or two year term, or try to find the money to sell this house.
Please don't judge me for purchasing a house with my husband, I suppose we could have just rented instead of having a house of our own. It did seem doable at the time when we were getting decent rent from the first house. Now it's just an albatros hanging around our necks.
I had thought about it, I am going to have to ask around I suppose. I was doing some reading on it and I'm worried the bank won't play ball due to us owning another property. I will have to ask a CPA perhaps?
Also, I was worried it would look like we were trying to "buy and bail" which was never our intent, ever.
If we could get rid of that house, we would have around $700 a month we could put to any type of loan we took out to sell it, I know we could pay back anysort of reasonable loan if someone would play ball.
In some ways you are in a lot LESS risky spot than others. You have potentially about $60,000 in negative equity in a house that you believe could fetch $120,000. I have seen folks is MUCH worse shape.
I do understand your concern about the lender possibly seeing your current residence as a "buy & bail" scenario but even if they do the reality is that many many borrowers have foisted much more serious debts onto lenders. Lenders could pursue judgement against you put since the stakes are so low the more likley path is that they will not even spend time worrying about the debt. The situation is such that your loan probably is not even owned by the lender but is in the portfolio of Freddie or Fannie. The "bank" really does not have much motivation to make the GSE whole on such a small loan. If your hubby had PMI the stakes are even lower...
I would really try NOT to think about the cash you have scrapped together as anything other than your own hard earned savings. Similarly I can think of nearly no financial sense that could come out of your tapping the positive equity from current residence to pay off the hole on the other home. Of course lenders would see things VERY differently. DO NOT TALK TO THEM!!! Communicate only through lawyer.
I know that if the stakes were much higher the lender would be maneuvering differently, but my sense is that since this vacant home would really be pretty easy for the lender to find an investor type buyer it might make sense to find an EXPERIENCED attorney that has helped borrowers work out an agreement to absolve you of the debt / future obligations. Yes, your credit score will take a hit, but you are in another home, you have positive equity in it, you have savings. A bit of constrained credit is not nearly as bad as wiping out savings / going into deeper debt.
Heck, if there is any chance of an uptick in prices it might even make sense to "test it" -- list the thing for what you owe and see if some buyer just comes close enough for you to make up the shortage out of savings IF you are OK with seeing some money flushed away...
(btw As a guy, I feel sorry for your hubby. He probably did buy the place thinking "this makes more sense than renting". Unfortunately "life happens" and the financial risk of market down turn is something that few people gave enough thought to. Don't 'beat him up' for taking care of a sick family member. Learn from this. Plan not just for "average" times but "worst case" AS WELL AS "best case" finances. Keep working to build up your ASSETS and decreasing your DEBTS and you WILL RECOVER from this set back!)
Hi All,
Please, if you could offer ANY suggestions on my current situation, I would be so grateful.
Husband purchased a house in Michigan for $160,000 about six years ago, basically he purchased it on a 3 year ARM. A few years later he refinanced to a 30 year fixed and ended up owing $165,000. We have now slowly paid it down to about $159,000 currently.
I don't think he should ever have purchased in my opinion, but I'll keep that to myself.
Only two years after he purchased the house he had to quit his job and move to a different state to provide care to a family member. He made the choice to rent out the Michigan property thinking he'd move back there. Life happened, he got a new job in this new state, we met later and now own another house with a $187,000 mortgage and and assessed value of around $250,000.
The time has come to unload the original property, it is in his name only. Sadly due the terrible Michigan market it is worth only $110,000 to $120,000 at this time, and we can no longer find renters that can cover more than 50% of the mortage.
I have about $10,000 cash scraped together so far, and can perhaps borrow another $10,000 cash from my parents. That could still leave me $40,000 short. Do you think there is anyway I can come up with money using our current house? Perhaps some type of home equity loan???? The current renters are done in November 2011. The choice is, put new renters in the house for another one or two year term, or try to find the money to sell this house.
Please don't judge me for purchasing a house with my husband, I suppose we could have just rented instead of having a house of our own. It did seem doable at the time when we were getting decent rent from the first house. Now it's just an albatros hanging around our necks.
Any ideas very much welcome!!
I think it will depend on the health of ya'lls assets, and the history and current state of ya'lls finances.
I'll send you a link in your direct message inbox -- may or may not help, but you will get really good feedback on it.
Hi Time, I feel for you but like some have said it could be worse. You are the best as you seem to "get" that your new husband put family before money and he is worth keeping. I think most of us expected something to happen with all the shakey loans out there but I certainly didn't expect the impact to be so deep and wide. Since none of us know what the future holds keep putting your relationship ahead of the money. You seem to understand your choices; play let's make a deal with the bank for the $60,000 or rent the home out at a monthly loss. To me, it seems to come down to a lot of pain now or pain for a lot of time. Is the house in good condition and can you find renters who won't tear it up? Like Greenback said, how is the rest of your financial life? Perhaps a chat with a not for profit credit couselor? In the overall scheme of things, the $60,000 isn't fun but it could be worse so consider the effect of walking on your credit score. The very best of luck to you and give that hubby a hug - you have a winner.
Hi Guys! Thank you all so much for your sage advice, for some reason I thought people might tell me that Hubby "Shouldn't have been so stupid as to buy a house" or that we as a couple shouldn't have been "so stupid" as to buy another home together in our new state. That is the vibe I feel is out there!!!
The Michigan house that we are trying to unload is in good physical shape. For the past two years we had a great elderly couple renting it out, they leave this November. With their rent money we were able to completely replace the very old roof, that baby is brand spanking new. The rest of the rental money has gone to small repairs and right to the mortgage.
How to "get rid" of that house really is a quandry. Put up all my savings, borrow from parents AND try to tap the current house for money, or just ask the bank to accept a loss.
I just don't know the best course. Is there an online list of "real" credit counselors out there, is the HUD website the best place to look? I'm just worried about getting hold of some sheister.
And yes, I NEVER beat my hubby up about the decision to purchase a house (which was within his budget at the time), and then move out to care for a family member who has since passed away.
Sometimes in my heart of heart I think about what a financial struggle I signed up for in our marriage, but dang it, I love the man. I know he feels badly that he's "burdened" us, that we've had to delay raising a family or really aggressivley saving for retierment because our budget is so tight balancing it all. I hate to see him torn up about it, its time to get answers and a game plan.
Credit counselors are NOT what you need. You need an experienced attorney that has PROOF of successfully getting lenders to "hold harmless" borrowers that turn over a well maintained, easy to sell property.
In my area (suburban Chicago) I could start by literally hanging around the court house to meet some attorneys and hit em with an "elevator speech" that explains what I want to do and the kind of help I need. If I give this speech to ten attorneys odds are I will get at least one or two to offer to take the case or refer me to a colleague that might have some experience. Once I got an interested attorney I would want PROOF that they have successfully gotten their client out from the burden of a home that is underwater. If you mention the fact that RIGHT NOW you still have some money to both pay the attorney AND lessen the "hit" the lender will experience that ought to help...
And yes, I NEVER beat my hubby up about the decision to purchase a house (which was within his budget at the time), and then move out to care for a family member who has since passed away. Sometimes in my heart of heart I think about what a financial struggle I signed up for in our marriage, but dang it, I love the man. I know he feels badly that he's "burdened" us, that we've had to delay raising a family or really aggressivley saving for retierment because our budget is so tight balancing it all. I hate to see him torn up about it, its time to get answers and a game plan.
If he is a good man you will get past this. Been there done that and it was all worth it ..... But if he doesn't treat you very well all the time in your present situation, bail out now baby!
Like others have said, if our economic times were different this house would have sold. Just very bad times and you are caught like many others. Both of you made the best decisions you knew to make at the time. I also recommend trying short sale with the bank. I think you should talk to a realtor who has a lot of local experience with short sales and research short sales before you approach the back. You probably need an attorney who specializes in SS's engaged in this process before you approach the bank.
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..... But if he doesn't treat you very well all the time in your present situation, bail out now baby! 
