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Hi. So my bf bought a 3 br, 2 ba manufactured home on 2 acres of land in the country outside of a small rural town in Ohio for $75,000. It's a nicer manufactured home with a permanent foundation, about 10 years old. We were well prepared and doing fine for the 1st year until my bf's job of 7 years started becoming less dependable. Not the best timing. He is supervisor/locator/machine operator of a small directional drilling company called Vision in Akron, Ohio. He ended up getting a small pay cut along with a big cut in hours. He now is lucky to work 30 hours a week, which is bad for us. It's become exceedingly difficult to keep up with our bills and it's obvious we need to move.
One problem is we qualified for the 1st homebuyer's tax credit and got a refund of $6,500. We have to stay in the house for 3 years or else pay back the credit if we leave before that time frame. We've been here 2 years. If we wait another whole year, we are going to just get further into debt. We're also afraid if we do leave before the time is up, the money would be taken from our tax refunds for the next couple years. We really don't want to do that of course as (especially now) we really need our refunds. So what I'm wondering is if we could make small payments to pay it back if we left or if there is any way to maybe be excused from paying it back due to our unfortunate situation? Not like we planned any of this.
We need to leave A.S.A.P. due to the not only the financial hardship but also the job situation. The company Vision gets their work from is no longer offering work to Vision and has cut ties with them. So in short, my bf will be laid off and he is going to need to find a new job. He has gotten a few job offers that pay significantly more than what he previously earned. One offered $60/hour. Here he makes $21/hour. In other states he can make much more than what he makes here. This is out of state so once again it's important that we move A.S.A.P.
We want to put the place up for sale after we figure out the whole tax credit thing. BUT what if the place doesn't sell? Not like the market is booming right now. Not like we can just rent it out either if we have to relocate to a whole other state.
So there's short sale. Still not guaranteeing us to sell. Just sell it at a cheaper price? Not exactly a know it all about short sales.
He said why don't we file bankruptcy and foreclose on the house? I don't know much about filing bankruptcy or how foreclosures work, so I don't know if that's a good idea or not. He said his mom did it to get out of her house and bought a brand new car right after. However a car and a house are completely different investments. I do want to buy a house again in less than 2 years, definitely less than 7 for goodness sake.
What I've researched about foreclosure is it will ruin your credit and you won't be able to buy a house ever again. I've read you can buy a house in 7 years. I've read that you can buy a house right after filing bankruptcy or foreclosing. It's confusing and I'm not experienced whatsoever in any of this stuff so I need some help. PLEASE! Is there any professional that I should talk to? Like a real estate lawyer or something? There has to be options for people like us that lose their job/in a tough situation.
(A little bit more about us....Just to add about why it's me asking this and not him is he works as much as he can so I'm researching trying to explore our options. He's going to have to do most of the work since the house is in his name, not mine. We're not married, but have been together for 10 years, have 2 kids together, no family or friends to help us with anything. I've been staying at home with the kids ever since they were born. I do have a part time at home job doing medical transcription, but I don't make enough to pay all the bills here. In other words, he is the main breadwinner in the household. We depend on his income. Even if I wanted to get a job, the hours he does work are not set and varies every day.)
Sorry I put so much on here, lol. But, I hope I explained and clarified my specific situation enough to get the best possible advice. Thank you.
You do need advice from a professional. But here is my situation...
As far as the tax credit, we also got one in 2008 for $7500, unfortunately it's the one you have to pay back for 15 years interest free ($500 per year starting in 2011). We sold our house in Oct 2011 - that being said we have to pay back the balance which is $7000 which is due the following tax year of sale (2012). There are some exceptions, but we don't fall under them. So anyway, I called and asked what our options are to re-pay that and they said we can make monthly payment arrangements to pay it back; however, there will be a penalty fee, and interest in addition they will take ALL/ANY refunds we get until it is paid off. Now keep in mind, look on the IRS website to see exceptions to your tax credit...it may all depend on whether you make a profit on your sale or not. If you don't have a gain, or you end up with a loss, you may not have to pay anything back. This would be the case if you decide to short sale.
I can't believe you're really very far underwater, if you are at all on the mortgage. I'd be wary of those advising a short sale or a bk with the dollar amounts involved.
As for the tax credit, it's my understanding that if you have to pay it back, it will be pro-rated over 3 years, so the amount you would owe would be closer to $2500 after 2 years.
If it were me, I'd get a market analysis from a couple of agents, and not those that specialize in short- sales, then take a hard look at the numbers.
Filing bk or short-selling over $10-$20k , with income like you've posted is pretty extreme.
You do need advice from a professional. But here is my situation...
As far as the tax credit, we also got one in 2008 for $7500, unfortunately it's the one you have to pay back for 15 years interest free ($500 per year starting in 2011). We sold our house in Oct 2011 - that being said we have to pay back the balance which is $7000 which is due the following tax year of sale (2012). There are some exceptions, but we don't fall under them. So anyway, I called and asked what our options are to re-pay that and they said we can make monthly payment arrangements to pay it back; however, there will be a penalty fee, and interest in addition they will take ALL/ANY refunds we get until it is paid off. Now keep in mind, look on the IRS website to see exceptions to your tax credit...it may all depend on whether you make a profit on your sale or not. If you don't have a gain, or you end up with a loss, you may not have to pay anything back. This would be the case if you decide to short sale.
Sorry to hear about your hardship. Good luck.
Thank you so much for sharing your situation and wishing us luck. Sorry to hear you went through a similar situation. It is hard and I think buying is overrated now. I miss renting. I like the idea of buying, but the house won't even be paid off until we're too old to enjoy not having a house payment. No worth it in my own opinion. If I buy a house again, it's going to be a new one, not a used manufactured house. I think renting an apartment or condo would give us more freedom anyway.
Do you think, judging by the information I gave you, that we would qualify for the exceptions? So we would have had to pay back that tax credit over time anyway, wouldn't we. Through the mortgage payments? This is just a big mess. Maybe it would be easier and better to just file bankruptcy? Would that eliminate the tax credit debt also?
Filing bk or short-selling over $10-$20k , with income like you've posted is pretty extreme.[/quote]
Thanks for your input, any help we can get is great. Nice to know we may not own the full 7500.
Not sure what you mean by the comment above? Could you explain? Do you mean we earn too much? He makes $21/hr. but you have to keep in mind the hours worked. He works some weeks 10 hours. Sometimes 20. Sometimes 70 (on good weeks). The $60/hr. is a job offer, not yet taken. So I just want to know what you mean. Sorry if I misunderstand. And just so you know, we are amateurs at this real estate stuff. One more question: Why are some things in the real estate business so mysterious and not 'in your face' with certain things? What I mean by that is, it seems like some information that would be helpful is 'left out'? Why is that? To rip people off?
By the way, the agent that sold us the house was also the agent for the sellers of the house. She got dual commission for the place. (looking back now we obviously made many mistakes) Another thing, since this is a manufactured home, it had to undergo a certain type of inspection which the agent knew of an inspector that passed us even though it didn't pass. Said he was doing us a favor. That these blocks under the home needed spackled with cement and then it would 'pass'. But he just said it did so we wouldn't have to wait longer to buy the house. Now that I look back, we SHOULD have had the owners do that crap, right? I mentioned above though, that my boyfriend bought it, not me. I tried to help, but he wanted to do it all 'himself'.
So what will happen if he files bankruptcy? When will we be able to buy another house again. Yes, he is behind on the mortgage. Owes 1500 in debt. PLUS our propane bill is behind, about 1500 on that as well. That's what's been killing us the most is the propane. Please help!
Yes, you can buy another home after a bankruptcy and a foreclosure. I believe your bankruptcy has to be discharged first, and your foreclosure has to be at least 3 years old.
Yes, you can buy another home after a bankruptcy and a foreclosure. I believe your bankruptcy has to be discharged first, and your foreclosure has to be at least 3 years old.
If I were you I would take the $60 an hour job, and move now - just go rent a place in the new city - but keep making payments on your current home, until it sells.
Foreclosure and bankruptcy - why are you even considering those options? If your husband is able to make three times more in another state, and if your mortgage is less than $75,000, there's no reason you can't keep making the payments on your home, until it sells.
I saw your post a few days ago, started to respond put got pulled away.
If you know your property will sale, a short sale is the way to go. Chances are it is not going to sell. I don't want you to file a bankruptcy, or do I want you to just "Short Sale" your property.
My name applies to what I do professionally. When I talk to distressed home owners - one of the first questions asked is "Do You Want To Save You Home?" Most of the time I get a yes response, I also get asked which is the best way to leave a property.
I do not know your full details other than what you have shared with us. In my opinion you're best option is a Deed in Lieu. It does damage your credit report, but not as much as a bankruptcy or foreclosure would.
If you have an organized plan, you can do this own your own without a attorney.
What a Deed in Lieu is - two things, first you apply for a loan modification. You would get denied because you do not make enough money to support the loan. You could say your husband moved out, and you are the only one that can show an income. They do not need to know he took another job, in another state, if you share that it can be used against you.
Secondly there is an attempt to short sale the property. It is typically listed for 90 days, after which you can walk free an clear. one thing that must by agreed to since Ohio is a recourse state, is that there's no deficiency judgement later (which are allowed in your state).
As for the Tax credit - I cannot predict the future though in my opinion. You moving to a different state - them coming after you for a 1st time tax credit your did two years ago, I think it is unrealistic it's going to happen to you. Just keep quiet and don't volunteer any information. In the future on your next home, do not expect apply for that again.
In closing - understand mortgage banks are the biggest debt collectors there are. They are servicing loans to pay their investors. Be careful of any information you give them, they are not looking out for your best interests.
this may be harsh...assuming you purchased exactly (or approx) 2 yrs ago as you stated @ $75k. let's assume a high interest rate for 01/2010 of 6%, add in 0.25% for PMI and 2% for taxes. just rough numbers mind you...your mortgage, pmi, taxes, insurance, etc comes out less than $700 a month ($674)
@ $21 an hour, 30 hr avg week = a gross of $2709
now with dependents, if he's done his w4 right, he takes more than the approx 70% i sometimes use to quickly calc take home pay. let's go rough and say it's 65%.
he's still bringing home $1760
1st thought...reprioritize the things in your life to get a handle on your monthly expenses. there is no way that you cannot afford this property and live a decent life. so answer some questions:
do you have...
cable? premium channels?
netflix?
internet access? what's the speed you're paying for?
cell phones? data phones? (i.e. iphone, droid, etc)
gas, elec or wood for primary heat?
city water or well?
do you eat out a lot or cook?
what's your grocery budget like?
student loans?
credit card debt?
car loans? btw what type of cars? how's your fuel expenses?
if all of these pan out, then take the example another poster left:
take the $60 an hour job and continue paying on this mortgage after you leave until you can sell it for the price you need.
an alternative is to also find a property mgt firm to rent it out for you. even at a slight loss you are better off and any loss on a rental is pretty much tax deductible.
again, this may be harsh but i just went through a FC about 6 months ago and you look (on paper) as though you can afford this. best advice i ever got post-FC was i shoulda filed the BK...woulda brought the lender to the table right quick. c'est la vie thank you MDRA
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