Tenant Choice

[Dave Mustaine]

This is a hypothetical question based on a decision I will likely need to make.  If you had to chose and approve one of these tenants, which one would it be?

Assume both renters have the same amount of income, assets, liabilities, and same credit score. The renters incomes cannot be garnished,

Renter 1. 100k mortgage with 1k monthly payment includes taxes and insurance,     Stopped paying mortgage for a year and is in forclosure. 100k credit cards pays 1k per month on time.  Pays all non housing bills on time   

Renter 2. 100k mortgage with 1k monthly pmt, which he pays in full on time, 100k credit cards with 1k monthly payment, stopped paying credit cards several months ago. Assume credit card balance is growing only at same rate as mortgage in default on renter 1.  Pays mortgage and all other non credit card bills.  

In sum, assuming all else is equal.  If you had to end to one of them would you rather rent to someone who defaults on their mortgage with forclosure or defaults on their credit cards.  Thx. 

[Angela Henderson]

I  would recommend that you keep your home and pay your mortgage. I was in a similar situation. I'm still underwater for 30k+ and was barely making it with 50K in cc debt. I entered a debt management plan over a year ago and my credit score is slowly improving and my cc debt is now down to 37k. It's hard but can be done with lifestyle changes. I also just purchased my 1st rental property (with cash) so all things are really possible. It will be tight, but there is light at the end of the tunnel and if you stick it out with the cc mess, like me, I'm sure you'll never use credit cards the same way. My credit score is now high enough to qualify for a mortgage so I'm hopeful that with 100%equity in property #1, that I can get financing for property #2. Good luck and make wise choice.