Question about houses

cu97tiger

So my BF and I live in the same house that he bought with his ex-wife several years ago. It's too expensive for us (I have a mountain of student loan debt that she didn't have) and our roommate is getting ready to move out. Neither of us wants to have a roommate forever, and to be honest, the house is just too big for two people.

Like most other people, the mortgage on the house is well over what we could get for it (the first year I was here, it was on the market, no offers).

Has anyone had experience buying a home while still owning another home? Short-selling? Foreclosing? We are just now starting to look at the different options but my BF is uber-responsible and hates the thought of 1) walking away and/or 2) messing up his credit. I just want us to be starting off our marriage on solid financial ground.

Blue & White

I'm pretty sure you can talk to your bank hypothetically about whatever sort of situation you may be looking at.  I've done it before for loan stuff without affecting my credit.

MLekathLEEN

I'd talk to a bank or a realtor about it. I'm probably wrong but if you find another house, you can put a contingency on the offer pending that you sell your home within however long. Again, I'm not 100% sure but I would definitely talk to someone and see what your options are.

Hazel_B

I know of two couples that were in that situation. I don't know how it worked, but in one case the bank would only start working with them if they defaulted on their mortgage so many times. They managed to sell their house and have moved to a different state. I have no idea how this has affected their credit.

I agree with talking to your bank, however  you may need to talk to numerous people to see all of your options.

calindi

I don't know anything about buying/selling houses, but I wanted to wish you luck!  It's cruddy that you're stuck in this situation, but I admire you both for wanting to make it work and not just walking away from it.  I suppose you could talk to a Realtor or a banker or a real estate lawyer who could give you advice - do you know any to reach out to for their input?

Good luck!

desertsun

What about re-financing the mortgage for a lower payment and hanging onto it until you're less upside down?

calindi

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_question-houses?plckFindPostKey=Cat:Special Topic Wedding BoardsForum:136Discussion:9d76c5f2-7db3-4e56-af11-44ba419d86f4Post:f1992f7d-aa7f-4c1d-a5a5-3ef88cef1756">Re: Question about houses</a>:
[QUOTE]What about re-financing the mortgage for a lower payment and hanging onto it until you're less upside down?
Posted by desertsun[/QUOTE]

That could be a really good idea, if you can do it!  Also, if you're able to, you can probably get more money out of the property by renting it out (at the least what you owe on the mortgage each month, probably a good bit more, but I don't know your real estate market), and meanwhile live somewhere else (rent or buy) that costs less per month.

Elle1036

When I saw this topic on the board, I thought it said "Question about HORSES."  Hmmm.  Maybe I'm still tired.

AudgiePodge

You wont be able to refinance for more than what the house is worth. If you still owe 10k+ than what it appraised at, you won't get approved unless you pay for that difference yourselves. 

I don't know how your housing market is, but here it is horrible. ExH is renting out the house we bought together for more than a $400 difference from his mortgage.

If you're looking to short sell, you usually have to miss x many payments before the bank will consider selling your home for a loss. This also damages the home owner's credit. And not all banks will even do that. If you do end up getting an offer while you're doing a short sell, it's up to the bank, not the owner, to accept the offer or not. 

Foreclosure=bad. It completely ruins your credit and definitely hurts your chances of getting another home loan. It even hurts your chances of renting in some cases.

When trying to qualify for a home loan, it's best to have a low debt to income ratio. Like you mentioned, you have some reasonable student loans. That will count against you. The general rule of thumb is 25%-30% of your income will go to your rent/mortgage. If it is higher than that, it is probably a good idea to down size. 

Good luck.

cu97tiger

Thanks everyone. Luckily one of BF's best friends is a realtor. We're sitting down with him this weekend to discuss our options. BFs bank just told him they would NOT modify his loan because he is not delinquent. Which is completely backwards. We basically have to stop paying to get them to work with us. Ugh.

We'd love to stay in the house, but with an interest-only loan that is so far underwater, it might take us 10 years to even get back to even. And the loan expires in 6, so then we'd be REALLY screwed.

One of the things we'll talk to the realtor/friend about is renting it out. In our market we're not sure what we could get for rent, and it might be several hundred dollars short of the mortgage, which makes moving to a less expensive place kind of pointless (since the difference would put us right back up to what we're paying now).

We want to do the 'right' thing but I'm definitely against draining our savings and every spare penny we make because of this mortgage crisis. We didn't do anything wrong so I don't think we should be punished for it. (For example, if the housing bubble hadn't collapsed, BF would have sold this house when he got divorced and bought something smaller, but because of the slump, he couldn't get what he paid for it). Hopefully the realtor/friend tells us there's a chance we could sell the house and only lose $10k... if so, we'd be out in a heartbeat.

cu97tiger

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_question-houses?plckFindPostKey=Cat:Special Topic Wedding BoardsForum:136Discussion:9d76c5f2-7db3-4e56-af11-44ba419d86f4Post:25a3d548-5cb0-4edd-83a0-2a977d94dbe9">Re: Question about houses</a>:
[QUOTE]When I saw this topic on the board, I thought it said "Question about <strong>HORSES</strong>."  Hmmm.  Maybe I'm still tired.
Posted by Elle1036[/QUOTE]

You'll never see anything about horses coming from me. I'm HIGHLY allergic and had two bad incidents when I was a kid. I think they are beautiful but must admire them from afar. :)

MLekathLEEN

Elle- I keep reading horses too. I have also came back to read it and thought "Why is she asking about horses?" LOL

It's Friday, you (and I) are forgiven.

Elle1036

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_question-houses?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:136Discussion:9d76c5f2-7db3-4e56-af11-44ba419d86f4Post:8c5240f8-17d4-4bf8-b222-044747b2416d">Re: Question about houses</a>:
[QUOTE]In Response to Re: Question about houses : You'll never see anything about horses coming from me. <strong>I'm HIGHLY allergic and had two bad incidents when I was a kid.</strong> I think they are beautiful but must admire them from afar. :)
Posted by cu97tiger[/QUOTE]

High Five!  Me too! 

A couple years ago, I was in New Mexico with some friends and we decided to do a horseback tour.  I thought "I haven't been around horses in years; maybe it's not a bad allergy anymore..."  Wrong.


Ekath - Thanks!  I feel better.

calindi

To be honest, I read it as "horses" originally, too!

It really stinks that someone who wants to find a way to make it work is someone they won't work with, while they'll work with someone who isn't taking responsibility for their obligations.  So backwards!  Ugh!

Good luck!

Hazel_B

How bad is the housing market in Phoenix?

desertsun

Tiger, I hope your realtor friend can help you guys figure something out!

SenoritaCupcake

Yeah, I saw horses too. We need caffeine.

AbigailMS

In Response to <a href="http://forums.theknot.com/Sites/theknot/Pages/Main.aspx/special-topic-wedding-boards_not-engaged-yet_question-houses?plckFindPostKey=Cat:Special%20Topic%20Wedding%20BoardsForum:136Discussion:9d76c5f2-7db3-4e56-af11-44ba419d86f4Post:131d1251-27a1-44d4-ab73-78fdd4dd23be">Re: Question about houses</a>:
[QUOTE]In Response to Re: Question about houses : That could be a really good idea, if you can do it!  Also, if you're able to, you can probably get more money out of the property by renting it out (at the least what you owe on the mortgage each month, probably a good bit more, but I don't know your real estate market), and meanwhile live somewhere else (rent or buy) that costs less per month.
Posted by calindi[/QUOTE]

<div>I was actually going to suggest renting it out! My dad has 4 rent houses, and he's still paying off the last one. He can easily rent it out for more than the mortgage costs, I'm not sure how this would be in your area, however I was intending to suggest exactly the same thing as Cate, rent someplace a bit cozier and a bit more your size.</div>

cu97tiger

The market here is pretty bad. BF didn't even buy at the highest point... if he had, we'd be at about 60% of the mortgage, as of right now, the house is worth about 86% (to refinance you have to be at at least 120%).

BF is doing lots of research about our options. It's stressing him out and my heart hurts for him. In the end though, we're making the decision together and I'm confident that we'll figure out the best thing for 'us'. Thanks to all for the advice!

PS - Elle: I used to be super-allergic to dogs and cats as well as horses (really, anything with fur). Now I'm not at all allergic to dogs, cats don't bother me nearly as much as they used to, but I still nearly hold my breath every time I pass a horse farm (there are actually a couple within a mile of our house).