Looking for advice, preferably from people w/ recent experience. Recession experience will be helpful too, but I’m sure the environment has changed in the years since.
We are both pushing 50, good jobs, my wife has rheumatoid arthritis. Still owe 100K on mortgage, may be able to sell house for very low 80’s. Lived here 12 years. We are simply tired of the house, we want simpler lives, less upkeep on the house, tired of 4k plus in taxes and other yard upkeep.
I want to walk away from the house. Questions we have…should we tell the bank of our plans or just skip a couple months and hand them back the keys? Other than a significant drop in credit rating, what else will the bank do to us? Will they pursue us for any add’l funds or can I walk away clean?
We also have a 2nd mortgage with a balance of 13K. The payments are low, so I’d like to keep paying that. Will I be allowed to keep making those monthly payments even if we are out of the house?
We don’t want to take on add’l debt but we do make 100K combined per year, but we really cannot add to existing debt. We can afford a decent apartment if we walk away.
I’m sick to death we are at this point, but there is zero benefit and honestly quite a bit of missed opportunity costs by keeping up this house. We made mistake buying this house 18 months before housing market collapsed.
Are there any other options that I’m unaware of? Renting out a room or moving and renting the whole house is not something we have much interest in.
I’ve been through something similar, and the only really sound advice is for you and your wife to talk to an attorney who specializes in these matters.
Wow, that’s a bummer. I don’t think the bank will just forgive you for walking out. They can’t sell the house for anymore than you can. You’re looking at years of debt collectors, bad credit and lawsuits. Apartments check credit reports and employers do, also. What if you need a new auto? Don’t do it, dude. Have you tried renegotiating with your mortgage holder?
The issue is not that the mortgage payment is too high, it’s just that it’s absolutely banging my head against the wall. I’d like to stop this damn treadmill
I don’t understand why or if you can do that. My son walked away from a house some time ago - including a second. Credit rating destroyed by bank and eventually, the second was sold to some very persistent collectors.
Late advice from a realtor friend was that when son did the short sale with bank, he should have contacted the holder of the second and negotiated a pay off. Realtor said they would have taken as little as 10% - and done better than what they got from the collection agency.
I don’t see an upside for you other than the immediate satisfaction you might feel about no longer owning a house. Your credit will be crushed (you might not even be able to rent). If I were you, I’d look into strategies for paying it off sooner, so you can reduce the amount owed and not be upside down. If the HARP program is still around, you might look into that.
Any guarantee you can keep it for 10 years until your credit is repaired?
IANAL, but I have paid off a second mortgage. By definition, it’s tied to the house, so unless you can pay that off before the foreclosure process ends, it will have to be addressed as soon as the title of the home changes hands, i.e., to a new owner or the bank. Our 2nd was nice in that it allowed interest-only payments (they are more than happy for that) which was good when the kids were younger and money was a lot tighter.
My brother went through a horrible divorce about 8 years ago, worked with a lawyer (which cost money), got the bank to agree to a short sale, and was able to sell the house at the agreed-upon price. However, his state laws require he covered the difference, so part of the agreement with the bank was that he signed loan papers at closing and is still paying the negative balance down today. That MAY be an option for you, get them to agree to a short sale and get them to agree to a loan to cover the balances…
It is not without pain - my brother’s credit was destroyed for years and only after making consistent payments for years has it come back, but not all the way. IMHO, walking away would be the worst thing you could possibly do, and as suggested by another poster, please talk to a lawyer…you may be able to negotiate your way out, but it will not be without pain…and you should do it with legal counsel…
Was he already in arrears on mortgage payments by the time he sorted out the short sale? If not, it seems a bit rough that they would trash his credit if he went through the process of dealing with the problem as appropriately and honestly as he could via a short sale and a payment plan to make good on the shortfall.
Sorry that the OP doesn’t want to live up to their end of the contract and stick a bank with a loss for no other reason than they are “tired” of the house.
That’s why banks make money, investment is a risk, a calculated risk,
If he’s paid for 12 years and we’re looking at a 100k to 80k difference… The bank didn’t lose squat, and probably still made money , probably quite a bit actually.
In any case with these numbers, I’d imagine the loan holders would be willing to negotiate it for maybe no more than you can sell it for.
Every business on earth has made calculated decisions to breach contracts from time to time. Sometimes the cost of the breach is less than the alternative, and doing so can be rational and justified. There’s no reason why an individual shouldn’t make a similar analysis for their own circumstances.
Contracts provide a legal framework for resolving disputes. They shouldn’t be thought of as moral obligations.
I don’t get the math: between your first and second mortgage your monthly payments should be around 500 bucks, if not you should at least refinance. Add 330 for your taxes, and (ignoring any possible tax benefit if you itemize) your monthly nut is around 800 bucks. Are there decent apartments near you available for less?
In other words, ignoring that you aren’t building positive equity for some time, is looking at it like your renting the place still making you feel like you’re banging your head?
