Creative ideas for my underwater home

[Larry Littrell]

First off I don't live in a submarine my home is financially underwater :)
Our story: My wife and I did the "charge up the cards then use your house as a cash machine" thing for 15 years and it worked great ....until it didn't.
We learned our lesson hard and we have stopped using cards and have been paying them off steadily.

Our Home:
Feb 2008 appraisal: $407,000
March 2010 appraisal: $248,000

Todays value: $305-310,000

Our Loans:
Primary Mtg $270k Under %3 interest Payments = 1700 (inc Tax and Insurance)

As you can see I could easily satisfy that with proceeds from a sale but....

HELOC 78k Interest only at %4.5 ADJUSTABLE Payment= $300

(Note:Option to go to fixed rate payment would go up to $725 month)

So I'm in it $2000 a month just for mtg payments.

Rental possibility= $1800-1900 month

We are now empty nesters in a 4 bedroom 2500sf house.

Eventually I want completely out. This house is not good for a rental. I would like to owner occupy a 3-4 plex.

Just wonder if the BP nation has any creative ideas. Right now I am working a second job to pay off our debt then I will focus on our HELOC and just pray rates don't go up.

[Pete T.]

Hey Larry, I am not sure there is a quick fix for this- but 1 piece of advice would be to concentrate on the HELOC first. The rate is higher, its not fixed and they are both attached to the house. Also, it is smaller so you can get rid of a payment faster which will help you to qualify for something sooner, possibly rent if you have to, and gives more options (smaller monthly committment). Once the HELOC is payed off, then you could consider selling or renting and buying something else, but that will also require having some amount of cash available. You might want to start w/ a duplex as larger MF will require more reserves and you could have some expensive surprises starting off.