All Forum Posts by: Brian B

Jon,

Obviously we would want to make the sale/new rental equal out so we're not paying both at the same time (or forced to stop paying the mortgage) but if we happen to find a perfect rental for us at a great price I'd like to be able to do it. I'm trying to consider every possible thing I can.

But yes, overall we've decided that it's important for us to move this year. 550 square feet is not enough for 3 people, especially when one of them is an extremely active 1 year old. We just don't have space in the condo anymore. Plus I'm driving over 2 hours a day to and from work and the cost of gas and tolls is steep, not counting the wear-and-tear on my car.

I did some preliminary factoring and apartment hunting, and depending on the neighborhood we can rent a small rowhome or apartment for about $800-900 a month that doubles the space we currently have. Plus, with savings in gas and tolls (which are both on the rise), the overall savings from our current situation could be significant, with a much more comfortable living scenario, closer to work and the grandparents, and with significantly less driving...which equals more family time. So yes, we think moving this year is pretty much essential. Because our current situation isn't working anymore.

Ok, so I put a call in to the loan officer who worked with me on my refi last year. I'm waiting for a return contact and if I don't get one soon I'll call and see if I can get someone else.

But in the meantime a thought occurred to me.

We think our best bet is to get a short sale and move. We have a few prospective areas we'd like to rent in but we haven't done any concrete looking...just perusing. I realized that regardless of which avenue we take (sort sale or rent out w/ a loan mod, if possible), there's going to be a period where we'd have to pay both our new rent and the mortgage payments on the current condo. We simply don't have the money to do this. If we can't find a buyer, then how do we pay both? Has anyone encountered this? Does the bank typically work with people in this scenario?

Joel: I need to spend some time thinking about the whole credit thing. On one hand, having good credit is important, but on the other hand, I've become so disappointed in my job market as a special ed teacher and the financial state of our world that I don't want to buy another house, and if I buy a car I'm not going to buy a shiny new one off a lot. I'm going to drive my car until it simply will not run anymore and I will buy another one that's serviceable. The job market for teachers in my area is so thin that it took me 2 years to get out of my old school (and it's yearly pay cuts) and into the one I'm at now. Same goes for my wife, who as I've said, still has no teaching job since our daughter was born. I never expected to be rich, but I certainly expected that as a special ed teacher with 6 years under my belt and 4 years of administrative experience as an academic dean in private schools, I'd be making more than $35,000 a year. I feel, as I imagine many people do, that I've been let down by it all. My goal needs to be for us to live with as little credit as possible, because I just don't trust the system anymore. Overall the idea of a credit hit just seems kind of "eh." I do want to do what I can to avoid it though, but if it happens, it happens. I suspect I'll feel better in the long run.

Also, you mentioned the taxes...I did have my assessment lowered slightly through a homestead exemption, which I don't fully understand, but it helped to take some $ off the monthly payment. I will look into this further, however, as this combined with a loan mod could make renting the condo significantly more viable.

I'd love to buy a new car too, but we just don't have the money for it.

Wow. Lots of information here. Thanks to all who have been so helpful. I'll try to address everything I can...

1. My mortgage is a 30 year fixed rate. It was originally 7%, and last year I refinanced it to 5%. That, with a discount for automatic payment withdrawals, saved us about $200 a month, which has kept us afloat. I have not yet talked to the lender because before I do, I want to be as informed as I can. My wife and I talked about it over my Christmas break and I decided to give myself a week or two to research and talk to whoever I could for some advice or information before I called the lender.

2. As for the debt, the CC rates aren't high. I would say moderate. I plan to use our tax rebate to pay down the debt with the highest interest at least a little. The student loan debt is unfortunate...most of it belongs to my wife...my student loans account for about $12,000, and hers are the remainder. If it matters, most of the CC debt is in my name, and most of the student loan debt is in hers...and the mortgage is under my name only. Does that matter at all? I suspect it doesn't.

All things considered, I would prefer to short sell and take the credit hit and just be done with the whole experience. At the time we did it, it seemed like a good idea and we had a noble plan that I really believe would have worked out for us had things turned out differently. In hindsight though, it's a huge mistake that I'm not proud of. But that's the nature of these things, I guess. I can live with modifying the loan and renting it out until I can sell it, but I just want it gone so we can move on with our lives.

I feel like I have a good amount of information. I guess my next step is to contact my lender.

I sent you a brief email.

I also think short sale is the most responsible route I have available to me, but it's not without it's issues.

1) I don't know how I would pay realtor's fees...so I imagine I would want to sell privately (or try to) but I've read that this might hinder my ability to short sell.
2) I understand I would be responsible for income tax on any forgiven debt, which I don't have the money for at the moment
3) My other option would be to have a personal loan to cover the remainder of the mortgage, which doesn't do much to solve the issue.

I can rent, as out of the 20 units in my building, I'm the only non-renter. There used to be more, but in the past few years owners have sold their units or rented them out so that I'm the only one left who lives and owns.

I want to do as much research as I can before I call my lender to explore my options with them so that I am as knowledgeable as possible.

I was wondering if anyone could give me advice on what to do regarding my underwater mortgage. I understand I have a bunch of options but I'm not sure which one is best. I am a teacher; my wife is unable to find a full-time job so she tutors 10 hours a week. We have a one-year old child. We pay our bills on time (95% of the time...sometimes I make mistakes), but at the end of the month once bills and living expenses are paid we have nothing else. We have some CC debt, about $13,000, plus student loans totaling about $40,000. We are underwater on our mortgage. Our condo is tiny for our family and we would really like to get out of it to save money, rent and streamline so that we can have another child and have the space in the budget and the space in an apartment/house to accommodate it.

In 2007, my wife and I bought a condo in Pennsylvania for $135,000. We got 100% financing. I had just gotten a big promotion and the promise of another, so we bought it with the idea of renovating (it's a little bit of a fixer-upper, not much) to either "flip" or rent out once we did the work and refinanced and paid down some principle to gain equity and lower the payments. That never happened. We did get to do the kitchen before the bottom fell out and my wife and I (who both taught at the same school) found both our salaries cut by 25%, my promised promotion (and future raises) gone, and our savings decimated. Now, we have very little savings. After our child was born my wife could not get her job back. I did get another job, which combined with a timely refinance has kept us afloat, but barely.

We are not behind on payments of anything. But, we are underemployed and have very little money. Getting out from under this property with it's tax load and condo fees and debt would go a long way toward helping us get long-term comfort, but I don't know how to do it.

I know most will recommend to stay the course, but this condo has become a massive burden.

I'm not sure about renting the place out, because I don't think the monthly rental would cover the mortgage plus the condo fees (which, together with taxes and PMI totals about $1050). Plus, if I did that I'd have to pay income tax, and our budget doesn't have space for it.

If I sell, I'd have to short-sell and damage my credit, and have no money to pay realtor's fees.

What should we do? Are we stuck here? I know we would be much better off financially and even emotionally if we could rent a bigger place in an area with a lower cost of living, which is closer to my work (as of now I commute an hour each way). At this point I'm thinking the best way out is to take the big credit hit for a few years and walk away. We don't use our credit cards anymore, and we've cut back significantly...we can live on cash.

What would you do?