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The details:
house purchased for $237,000.
Interest rate: ridiculous, but we have never missed or been late on a payment.
We basically have no equity since the last 5 1/2 years have been to all interest.
I estimate our house is worth: 179,999.
We are a growing family. WE have little in reserves.
We need a bigger house.
For what we pay now, we could basically afford a house 100K more.
However, we bought at the top of a bubble in real estate, and that bubble burst a long time ago.
Short Sale: would severely damage our decent credit...and we would have a hard time getting another loan within the next 3 years. What would we do in the mean time?
Renting: can't see us even getting enough for the mortgage. Plus, Being a young family, I'm not in a position to deal with two of everything.
What can we do? Could we take out a personal loan to pay the difference in purchase to sale price? Then, hope we get another mortgage for the next house.
We need options!!!!!
Thanks in advance for all those who help with ideas
You might qualify for a short sale, you would likely have to rent until you qualify to buy again...and in 3 years you will need a substantial down payment. For advice on your ability to complete a short sale, speak to a local listing agent with experience selling short sales.
The very best advice you will get from anyone is the advice you get from a real estate attorney. They can give you options and let you know the legal consequences of each. The tax and future liability laws are very local and your legal advice should be local.
If you go the short sale path, then you need to start a relationship with a trusted mortgage broker to understand exactly when and how you will qualify to buy again.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Would it not be more cost effective to use what would be the difference in higher payment on a larger home to simply add on to the existing house? That would add equity. When under water but still able to make the payments the best move is to stay and live there until the value goes back up above whet you owe, which could be as little as 3-4 years or take 20, depending on your area. Here property values have gone up 11% in the last month, that's $60,000 on our house.
@Nina...It is not an interest only loan. However, the interest rate is so high....as little as 40 dollars is going towards principal..and we've been here almost 6 years!
@Hemlock...adding on will not add value to our house....lipstick on a pig is still a pig. We have a cute house...but it's a 3 b, 1 ba in a neighborhood that is full of them. We literally have new construction in our town bigger than our house going for 210's. We will never see our house back at the value we purchased for.
Thank you all for advice.
We may have to add on just to maintain...but it's burning money in one respect...
Put aside the idea of "adding value" to your house by adding on to it. Would an addition allow you to stay in the house happily? Could you see yourselves happily staying there for the next 20 years, if you added on a room or two?
Messing up your credit? Spending three years in a rental? Saving a substantial down payment for a new house? Moving once now, and again in three years? All of that could be avoided by staying where you are now.
Even if you didn't add any value to your home, if you end up saving money in all those other areas, it might be worth it to add a room or two!
Quote:
Originally Posted by FarrAvenue
We have a cute house...
Good! If you hate the house, that can be reason enough to want to move. But if you like it? Then maybe it's worth staying put.
Quote:
Originally Posted by FarrAvenue
We may have to add on just to maintain...
Or you could downsize your possessions... Seriously, too much furniture, or too large of furniture can make any room feel smaller. If you decide you can't get a bigger home, try taking one piece of furniture out of each room and see how you feel! Get a smaller couch. Or get rid of your end tables. Little things can make a big difference in how a room feels.
Quote:
Originally Posted by FarrAvenue
but it's burning money in one respect...
Ah but that's just one side of the story. There are many other sides to the story...
Years ago, children shared bedrooms and miraculously they somehow survived. Kidding aside, you have 3 bedrooms, let the kids share rooms and they will be just fine.
Have you talked to a mortgage broker about re-financing with the new rules out there? Lots of specifics and I don't know your situation, but it is possible to refinance in some cases even if you are under water. A 1.5% drop in your interest rate should help out quite a bit.
We are a growing family. WE have little in reserves.
We need a bigger house.
For what we pay now, we could basically afford a house 100K more.
However, we bought at the top of a bubble in real estate, and that bubble burst a long time ago.
The very reason you can, now, afford a home worth 100K more, is the same reason you are underwater now. It does suck!
We, actually, need a roof over our heads, food on the table, and loads of love in the house. Indoor plumbing is a wonderful thing too
You will find out that your "growing family" years are pretty short, in the scheme of things. Your house will be bulging at the seams with teens and their stuff, but then they (hopefully) move on with their own lives.
We are a growing family. WE have little in reserves.
We need a bigger house.
Give me a break!!!!!!! We raised our 4 kids in a 1160 sq foot house, 3 bedroom, 1 1/2 baths. We also had 2 others that were there on visitation once a month, we all survived very well.
Deal with what you have, limit your "stuff", and be thankful you have a roof over your heads that you can afford.
You have little in reserves. Does it even matter if your house was break even? How would you come up with money for commissions and closing costs on a new house?
You may also want to post this in the mortgage forum. This topic is discussed a lot.
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