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Well, we have two homes that we have mortgages on, and we live in neither of them. We were dumb, bought a house without selling the first (which we bought at the peak of the market, after it was on the market a few days) and now live across the country an d rent a house. Yes, two mortgages and a rental house, fora a total of $6300 a month for mortgage payments, rent, home insurance and tax.
We pay each on time every month. It sucks. But it's our fault, really. People have told us to "walk away" but how can we when we have no one to blame but ourselves? Yes, the second house's mortgage is the poster child for the subprime mortgage --its a 50 year no doc mortgage based on my income, when I was a self employed lawyer not making much at all. I didn't lie, but I could have, given their "wink-wink-nudge-nudge" philosophy.
I feel bad. $6300 a month is a lot of money. Even those who make "good money" $200K and up a year. Paying $6300 a month does not give you much room for error. What if the primary bread winner loses their job? Gets sick? You probably make too much to negotiate a short sale. Probably have too much assets to walk away.
That's why this real estate market is still so unsable. It's almost like wealth redistribution. The big banks loan money to the a lot of people who they shouldn't have. The majority of those people who have no assets, very little income just walk away.
aneftp figured out my story right way except for a few more things I didn't tell (a very long story):
1. by the time we planed to move out of MI in late 2008, we rented out our house in MI to a family and we moved out and lived in a much smaller apartment trying to keep the house even the rent was less than our mortgage plus city tax, etc. Howeve, the family only paid us one month rent untill they were evicted by court nine months after he started to rent. So, during that time, we have to pay both our rent and mortgage and city tax plus all the maintenance.
2. Bank will not bother to answer your questions if we had kept the mortgage payment current.
3. Our delinquency started several months after the tenant's no payment.
4. The family was actually forcefully evicted by the court: court sent peoples throw all his staff out of my house. For that, I have to pay the court $2,300. Not meation other legal costs.
3. A big portion of my fututre down payment will be supported by friends and family. Of course they do not want us throw the money in MI.
aneftp figured out my story right way except for a few more things I didn't tell (a very long story):
1. by the time we planed to move out of MI in late 2008, we rented out our house in MI to a family and we moved out and lived in a much smaller apartment trying to keep the house even the rent was less than our mortgage plus city tax, etc. Howeve, the family only paid us one month rent untill they were evicted by court nine months after he started to rent. So, during that time, we have to pay both our rent and mortgage and city tax plus all the maintenance.
2. Bank will not bother to answer your questions if we had kept the mortgage payment current.
3. Our delinquency started several months after the tenant's no payment.
4. The family was actually forcefully evicted by the court: court sent peoples throw all his staff out of my house. For that, I have to pay the court $2,300. Not meation other legal costs.
3. A big portion of my fututre down payment will be supported by friends and family. Of course they do not want us throw the money in MI.
Be very careful what you are attempting to do.
1. Take care of that first home in Michigan that's under water. Forget about trying to buy another home in Richmond, VA at this time.
If you guys had no assets, income, I was just say file for bankruptcy. However, you guys income will increase dramatically in July/august because of your wife's income.
What you need to do is consult an attorney asap. A legit attorney will cost you from $1000-5000 on this matter. You need legal advice. Why? Because the banks will and can pursue a deficiency judgement against you if you either foreclose on the property or do a short sale. If the bank won't pursue it, they will sell off that bad debt to a collection company and that collection company will go after your assets in the future (if could be next year, it could be 5 years in the future).
So take care of the underwater home with an attorney's help now The reason I say now, is because the legal process/banks will look at your current assets/income. They won't consider your future income (and don't volunteer this information about your wife making $150-200K plus with her new job). That's not information you want to disclose (and you are not required to disclose).
So get the Michigan home's problems solved first and foremost.
2. Now onto your second situation about wanting to buy a Richmond home for around $600K. Frankly, this is a crazy idea (if you are already in trouble with your Michigan home). Your credit will take a hit with the Michigan home. It' going to take time to rebuild your credit. It may be 2-4 years. But there are physician loans your wife can get approved for in 2 years at pretty good rates. But lenders will want to see you are on good behaviour for at least 2 years.
I don't know if it's you that doesn't want to "downsize" or "downgrade" your lifestyle or if it's your wife.
But buying a $600K home in Richmond is a very bad idea with your current situation. Add to this the "jumbo" loan market in Richmond. I believe the FHA limits for that area is around $535K. Why is the number $535K so important. Because that means people buying the $600K an up market will need to put enough cash downpayment (meaning 10-15 percent) just to get under that $535K FHA loan limit. If people are in jumbo terrority, it's going to put tremendous pressure on the "higher end homes). Those homes in the $700K and up market but that' s also going to have a negative impact on their $600k home you are trying to buy (I know you have 20%, but other's won't have 20% downpayment to buy these similar homes and will be stuck in jumbo terrority).
Please show your wife this post. I'm in the medical profession myself. We all make good money. But so many of my friends have made idiot moves with this housing crash. They buy that $700K home, who's value has lost lost $150k; they end up renting out that home at a big loss and than their spouses want to buy another $700K home. Now they are stuck paying mortgages over $10K a month of both homes. It's crazy. The wife doesn't think. They say their husbands make $400K a year. It doesn't matter how much they make. It matters how much they are spending and saving. Their husband could lose their jobs, whose knows or get injured. So many "wealthier people make dumb decisions" with their finances.
I am just trying to let you know that it's a very bad idea to buy another home in such a short amount of time while you are in trouble trying to unload an underwater home. Get legal advice how to negogigate the sale of your michigan home so the lenders/collection agency doesn't pursue that bad debt 5-10 years down the road, especially when you will have significant assets at that time.
Well, it seems a big topic and it is big to my family. Please help me figure out:
Backgroud A:
1. House in Michigan purchased in 2005 for $420K. Current fair market value $190K.
2. Family have to be relocated to Ricmond, VA for both my and wife's job
3. The house in MI has been in the process of negotiating a short sale with Citi-mortgage.
4. Both my wife's and my credit scores fall from >750 to <600 because of the delinquency and short sale.
Background B:
1. I am an engineer
2. Wife will join a private medical group as a doctor
3. Family income will be >$250K/year
Mission:
1. Perchase an $600K house with 20% down.
2. Lease to Purchase a $600 house with at least 5% of the purchase price down.
Current Situation:
1. Found at least two houses in the price range and in the area we like.
2. No bank would like to offer a loan (even with 20% down) just because our credit score
3. The proterty owner don't want lease to buy (even with 5% to 10% of the perchase price down plus monthe rent plus we pay the utilities, city tax, etc.)
I know we can wait for a couple of years for our credit score coming back. But I just want to purchase and settledown so we can focus on something else. Is it a misson impossible?
Appreciate your imput.
Thanks
Holy Moly some people never learn. Why don't you buy a $150,000 house and be satisfied with that? Why do some people just have to impress everybody by getting so deep in debt that they will NEVER see daylight? You are out of your minds.
And yes, I have seen doctors live in modest homes. Sensible, intelligent, capable doctors who don't think they are better than everybody else or feel the need to impress other people. KWIM?
Most of the family practice and internal medicine doctors in my hospital make a surprisingly average salary (and are paying off huge student loans). I have been to a few of their homes for social functions and found they are more modest than my home. One of my kids' childhood friend was the daughter of a cardiologist - their house was pretty nice. ;-P
Why is no one bringing up the fact that the OP is going through a short sale and somehow has 20% to put down on another home?
Hmmm ... so let's see ...
Owes 336K
Valued at 190K
Which means he'd have to bring 146K to the table.
And yet, he has 120K to put down on another home?
No sht. That was my question in its entirety. You have 120k to put down yet would like to stick the taxpayer/other homeowners with your 146k debt by walking away? I don't really care whether or not your family wants you to throw their gifted money at MI. You OWE MI.
You bought in 2005 at the peak of the market....a time when housing was probably less affordable than it had ever been before, and at least here in AZ, median home price was 7x median income.
The very concept of doing that, which made a friggin disaster out of your finances, and then asking "what should I do now?", is simply laughable.
I hope one day you have kids and your 18 yr old calls you from jail saying "I made several really stupid decisions and am now locked up...what should I do now?"
ummm....how about asking me for advice before you make really stupid decisions?
No sht. That was my question in its entirety. You have 120k to put down yet would like to stick the taxpayer/other homeowners with your 146k debt by walking away? I don't really care whether or not your family wants you to throw their gifted money at MI. You OWE MI.
You bought in 2005 at the peak of the market....a time when housing was probably less affordable than it had ever been before, and at least here in AZ, median home price was 7x median income.
The very concept of doing that, which made a friggin disaster out of your finances, and then asking "what should I do now?", is simply laughable.
I hope one day you have kids and your 18 yr old calls you from jail saying "I made several really stupid decisions and am now locked up...what should I do now?"
ummm....how about asking me for advice before you make really stupid decisions?
Agree totally with your points. But lets not be too harsh on this forum.
OP was asking for advice. Most of you all think it's a very bad idea to try to buy another home when they are trying to negogiate a short sale with their Michigan home.
But that's what citizens (and permananet resident of this country) have always been taught. They want things, they want things now and don't want to wait.
Again, there's nothing wrong with waiting 2-4 years to rebuy another home. That's how long it's going to take to repair your credit. Or they can try to buy a much cheaper home and pay cash for it.
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