# Do I have any options to lessen this financial burden? **URL:** \ **Category:** In My Humble Opinion\ **Created:** [June 16, 2012, 2:14pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339 "2012-06-16T14:14:12Z")\ **Posts on this page:** 8\ **Page:** 1
**Author:** ![not\_what\_you\_d\_expect](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/not_what_you_d_expect/32/3246_2.png) [@not\_what\_you\_d\_expect](https://boards.straightdope.com/u/not_what_you_d_expect)\ **Post date:** [June 16, 2012, 2:14pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/1 "2012-06-16T14:14:12Z")
Okay, here’s the situation: I have a rental property that is financed at 7.5% (from 2007). I am probably $70,000.00 upside down. The only current way I can continue to make the mortgage payments is to take the money from my 401K turned IRA, which generates a 10% penalty to the IRS. Or get the rate reduced so that the payment is closer to the rent I receive. But I can’t refinance with this sort of a deficit, right? I know there are programs for home owners in trouble, but this isn’t my home. I’m just trying to slow the bleeding down… Do I have any other options available to me that I am unaware of? ---
**Author:** ![DCnDC](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/dcndc/32/2842_2.png) [@DCnDC](https://boards.straightdope.com/u/DCnDC)\ **Post date:** [June 16, 2012, 2:37pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/2 "2012-06-16T14:37:49Z")
If the loan is backed by Fannie Mae or Freddie Mac and the account is in good standing you could refinance through [HARP](http://www.makinghomeaffordable.gov/programs/lower-rates/Pages/harp.aspx). It doesn’t matter that you don’t live there. ---
**Author:** ![Emtar\_KronJonDerSohn](https://avatars.discourse-cdn.com/v4/letter/e/58956e/32.png) [@Emtar\_KronJonDerSohn](https://boards.straightdope.com/u/Emtar_KronJonDerSohn)\ **Post date:** [June 16, 2012, 3:15pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/3 "2012-06-16T15:15:26Z")
If you’re that far upside down on a rental, you should really at least consider bailing on it. A real estate attorney could explain your possible liabilities in your particular situation. My sister went through the whole HARP refi process. They wanted $4,000 in up front fees to lower her interest rate about 1%, but upside down private mortgage insurance is more expensive so she would only save like $30 a month. YMMV of course, and it couldn’t hurt to ask. I believe she was originally in the mid 5% range though, maybe there’s more savings to be had in your case. ---
**Author:** ![Spud](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spud/32/347_2.png) [@Spud](https://boards.straightdope.com/u/Spud)\ **Post date:** [June 16, 2012, 3:54pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/4 "2012-06-16T15:54:09Z")
Look at it as a percentage of the worth of the property. If it is worth $7 million, $70 isn’t a big deal… if it is worth $700k, you are probably still ok… if it is worth $100k you are screwed. ---
**Author:** ![Turble](https://avatars.discourse-cdn.com/v4/letter/t/8dc957/32.png) [@Turble](https://boards.straightdope.com/u/Turble)\ **Post date:** [June 16, 2012, 5:20pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/5 "2012-06-16T17:20:55Z")
I’d also say you should give serious consideration to bailing out. This is a business decision, not a matter of personal honor. If you do decide to bail, don’t continue to collect rent after you stop making mortgage payments – that is known as equity skimming and will have the FBI on your tail. ---
**Author:** ![not\_what\_you\_d\_expect](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/not_what_you_d_expect/32/3246_2.png) [@not\_what\_you\_d\_expect](https://boards.straightdope.com/u/not_what_you_d_expect)\ **Post date:** [June 16, 2012, 8:55pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/6 "2012-06-16T20:55:14Z")
> [@Spud](#): > > Look at it as a percentage of the worth of the property. If it is worth $7 million, $70 isn’t a big deal… if it is worth $700k, you are probably still ok… if it is worth $100k you are screwed. Yeah, I’m screwed. I don’t know what to do. Maybe I should consider a short sale? I’m not entirely sure how that works, but I’m running out of money. Thanks everyone. ---
**Author:** ![Spud](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/spud/32/347_2.png) [@Spud](https://boards.straightdope.com/u/Spud)\ **Post date:** [June 16, 2012, 11:38pm UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/7 "2012-06-16T23:38:45Z")
I’m afraid I may have to agree with the others then that you should consider bailing on it. BUT… get a lawyer first to make sure you aren’t getting yourself into any worse shape. ---
**Author:** ![Icarus](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/icarus/32/72_2.png) [@Icarus](https://boards.straightdope.com/u/Icarus)\ **Post date:** [June 17, 2012, 12:00am UTC](https://boards.straightdope.com/t/do-i-have-any-options-to-lessen-this-financial-burden/625339/8 "2012-06-17T00:00:53Z")
> [@not\_what\_you\_d\_expect](#): > > The only current way I can continue to make the mortgage payments is to take the money from my 401K turned IRA, which generates a 10% penalty to the IRS. This is a really really bad idea. Not only do you have the 10% penalty, but you have to pay taxes on it as regular income. So, for every dollar you are taking out you are only getting ~65 cents. (And you are missing out on the investment growth for your retirement…)