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Does it make sense to keep this house? Can I reallt afford it?

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  • Does it make sense to keep this house? Can I reallt afford it?

    Hello everyone,

    I hope this is the right place to posted this thread.....

    I am in need of some honest advice and this forum has always been a great place to get it So any thoughts or suggestions is greatly appreciated....

    I am hopefully days away from being discharged (hope I am not jinking myself) and am trying to assess my home and financial situation objectively.

    We bought our home a year and a half ago, used almost all of our savings as a down payment and on repairs (cosmetic updates too I admit).
    Well, long story short, our income levels have since changed (we make considerably less than when we bought it) and the value of this home has depreciated to the point we are now under water about $50,000. Hence, started the bankruptcy. Yes, we have included this home in the bankruptcy so if we need to walk away from it we can...

    Our monthly net (take home) income is about $7000.00. Our house payments including the first and second is $2759.00 (including taxes and insurance). We also have two car payments totalling $764.00. We are a family of 4, two children and have only about $300 in monthly day care expenses thanks to family.

    I would like to use this bankruptcy as the fresh start it is intended and my question (s) is this~

    Should I keep this house? And can I really afford it?

    My instinct tells me to hang on until the real estate market recovers (which will also give me time to work on rebuilding our credit) and then sell and buy something smaller and more affordable. But is this really a good idea and how long do I hang in there? Is time for us to become a renters instead?

    Our savings is only $9,000.00 and I know I need to work on rebuilding that. I am not too crazy about moving my kids again but know I need to what is best in the long run.

    On the other hand, I feel like this house is the only thing we have left to show for the savings we once had, so I am soo scared to walk away and start completely over with absolutely nothing.

    Anyone out there in the same situation? Any thoughts or suggestions are greatly apreciated and much needed...

    Thank you for all the great support!

  • #2
    Jencz: Your question is a pretty personal one. Do you like the house? What does rent go for around where you live and up to a standard you can bear? There are litarally fire sales of houses these days, and 9K for a “cottage” that you have less than $500 bucks a month would do ME fine. How about you?

    If you can muddle through, and you like the house good. My personal beliefs are, you are making less, why?, but then, for the same reason, you could be unemployed. Jobs are going down at this time, and we all cannot work at Wal*Mart.

    This is something you must ponder on your own, being as you know your own feelings and “gut feelings” about what is happening around you. I know what I would do, but if I told you, it may not work for you. I wish to owe no man a penny. ‘Hub
    If I knew it all, would I be here?? Hang in there = Retained attorney 8-06, Filed 12-28-07, Discharge 8-13-08, Finally CLOSED 11-3-09, 3-31-10 AP Dismissed, Informed by incompetent lawyer of CLOSED status, October 14, 2010.

    Comment


    • #3
      What is the actual value of the house? You are $50k under water, but is that $50k on a $500k value or a $250k value?

      What are the short and long term prospects to 'recover' the $50k?

      Also, depending upon the answers to the above, you may want to consider turning in your cars and have no car payment. Buy a cheap $2500 car for cash. No payment. JMO.
      Filed CH 7 9/30/2008
      Discharged Jan 5, 2009! Closed Jan 18, 2009

      I am not an attorney. None of my advice is legal advice in any way..

      Comment


      • #4
        I know bk is supposed to be a business decision, but holding onto you home? That is a tough question. I know for me I am emotionally attached to my home. Like you, we have made some major improvements over the years, most of it we did ourselves so there is a sense of pride attached. This is not just a house it is our home, where we live our lives. We have been here for 12 years and can't even imagine living somewhere else. We were able to get a loan modification, have you looked into this option? If you stretched out the payments for 30 or 40 years, but then again is this a business decision for you?

        Comment


        • #5
          Hello everyone,

          Thanks for the feedback. To answer a couple of your questions~

          Yes, we are attached to this home, it's not just a house to us.

          Second, the house was valued at close to $500,000 when we bought it for $478,000 and now is around $388,000 due to market conditions.
          We owe $420,000.

          As I had mentioned previously, we have done a lot of repairs and improvements and do have a sense of pride here (the figures above do not include these costs).

          I am employed but had to change jobs after losing my last one which happened to be in title and escrow services (when the real estate market tanked so did our jobs!) and as a result make less than I did when we purchased this home.

          After hearing your thoughts, I think we will stay put for now and continue on with our payments, just not reaffirm. I have thought about trying the loan modification but am a little weary as I have often heard your payments need to be in arrays. My mortgage is with WaMu and they are one of the more difficult companies to work with.

          Anywho~thanks for thoughts and suggestions, feel free to jump in with more.
          This forum is great for honest and caring advice!! thanks again

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          • #6
            jencz...my thoughts...you are fresh out of BK with no debts except your mortgage and regular household and daycare expenses, plus car payments. You net after the figures you posted $3176 per month. That is nothing to sneeze at after making your payments. You can easily start saving some money. As to the house and reading your postings; if I were you, I would stay put. The market will come back; it may take a while for your home to increase in value but that is normal after a downturn like this. As the others stated, it's what you want to do and if you are happy where you are as to your jobs, area, etc. Apparently your family is close by. Also if you tried to get another mortgage now if you wanted to try to get a cheaper home, you probably won't qualify with the BK. It is to your advantage as things now stand to stay put and I think you know it but just wanted a little encouragment that you were doing the right thing.

            Best of luck to you....
            _________________________________________
            Filed 5 Year Chapter 13: April 2002
            Early Buy-Out: April 2006
            Discharge: August 2006

            "A credit card is a snake in your pocket"

            Comment


            • #7
              Luckily, I was not dealing with WAMU, but I did get a loan mod with BoA and I was not behind on my mortgage payment. I didn't think it would happen but you never know. I don't think anybody would describe me as pushy, except maybe the employees in the loss mitigation dept at BoA. It can't hurt to ask and keep asking until you get the answer you want.

              Comment


              • #8
                Originally posted by Flamingo View Post
                jencz...my thoughts...you are fresh out of BK with no debts except your mortgage and regular household and daycare expenses, plus car payments. You net after the figures you posted $3176 per month. That is nothing to sneeze at after making your payments. You can easily start saving some money. As to the house and reading your postings; if I were you, I would stay put. The market will come back; it may take a while for your home to increase in value but that is normal after a downturn like this. As the others stated, it's what you want to do and if you are happy where you are as to your jobs, area, etc. Apparently your family is close by. Also if you tried to get another mortgage now if you wanted to try to get a cheaper home, you probably won't qualify with the BK. It is to your advantage as things now stand to stay put and I think you know it but just wanted a little encouragment that you were doing the right thing.

                Best of luck to you....

                Thanks Flamingo, I feel the same way too. I am just doubting my judgement after the bankruptcy and all. I am sure it will return in time....

                Comment


                • #9
                  jencz,

                  Your questions of whether or not to keep the house struck home with me. We are about to file Chapter 13 (we've fallen behind on our mortgage and want to keep the house). We built it four years ago...was our "dream home" or so we thought. Our income has been cut by over seventy five percent and with all the cc debit and large monthly house payment, we just couldn't do it anymore. I second guess myself everyday. Should we just walk away from the house we love? It is, after all, our HOME. It's so emotionally draining trying to figure out what to do. Our lendor is finally telling us we qualify for a loan mod but still have to send in paperwork to get approved. If it is it will reduce our amount by over one thousand dollars. If it doesn't get approved, we're going to have to more than likely surrender the house. This is the most stressful time in our lives, by far. Everything happens for a reason, and I firmly believe that. What's meant to be will be. I never thought we'd be in this position. Always prided ourselves in being good stewards of our money and paid everyone on time. Good luck with whatever you decide.

                  Comment


                  • #10
                    Originally posted by tkharvey View Post
                    jencz,

                    Your questions of whether or not to keep the house struck home with me. We are about to file Chapter 13 (we've fallen behind on our mortgage and want to keep the house). We built it four years ago...was our "dream home" or so we thought. Our income has been cut by over seventy five percent and with all the cc debit and large monthly house payment, we just couldn't do it anymore. I second guess myself everyday. Should we just walk away from the house we love? It is, after all, our HOME. It's so emotionally draining trying to figure out what to do. Our lendor is finally telling us we qualify for a loan mod but still have to send in paperwork to get approved. If it is it will reduce our amount by over one thousand dollars. If it doesn't get approved, we're going to have to more than likely surrender the house. This is the most stressful time in our lives, by far. Everything happens for a reason, and I firmly believe that. What's meant to be will be. I never thought we'd be in this position. Always prided ourselves in being good stewards of our money and paid everyone on time. Good luck with whatever you decide.
                    So sorry you and your family are going through this. I too believe that was is meant to be will be, but it does not make these decisions less painful. I hope the modification works out for you, I will keep you in my thoughts and prayers, and please continue to keep us updated.

                    I am very curious (and a little skeptical to be honest) regarding these loan modifications. Perhaps some other folks can chime in on their experiences with these modifications~where they successful or not? And who was the note holder?

                    Comment


                    • #11
                      the problem with the loan mods are they are usally temporary, I too am underwater my home i owe 540k and the value is only 320k if i am lucky. The first is not the killer it is my second we owe 250k on that and in 7 years the line of credit will turn into a loan, the rate will change from 5% to about 11-12% and our payment will go from 900 intrest only to 2400 P&I and that is just the second.

                      in summary currenly i pay 3200 a month and in 7 years that will change to nealy 5200 a month.The only way to get that lower is to refi, but the house would have to be worth more than 640k in order for that to work.

                      The same house in my area (sacramento, ca) is going for 240-280k, so why would i want to pay 540k when i can get the same thing for 260K or so. Heck i could double or nearly triple the house payment and have it paid off in 7 years vs holding on my emotions.

                      this is the kind of thinking you have to do. Take the emotion out and does it make buisness sense.

                      I have kids that i need to think about and make I never put them in a bad situation due to my own emotional needs.

                      good luck
                      Last edited by mmenz22779; 06-18-2009, 01:16 AM.

                      Comment


                      • #12
                        My opinion is that you should stay. Heck, your take home pay is more than our household gross pay right now and my mortgage is about the same as yours (yikes!). I know it's crazy but we plan to stay anyway and ride it out.

                        We dropped our second car and are really tightening up everywhere we can. It's going to be tight but we are hopeful that either our loan mod will come through and save us more money or our income will go up, or better yet both!

                        I totally understand the sentimental aspect of the home and the business side of things but in your case I don't think you're that far upside down to make it through.

                        Comment


                        • #13
                          I know a lot of people want to walk away from their home, but if you do it after bankruptcy couldn't you potentially be at the risk of the bank serving you with with a deficiency judgment?

                          I'd be very careful about walking away from a home. In Florida, if you do that, you're pretty much going to get served with a deficiency judgment if you don't play your cards right.

                          Comment


                          • #14
                            Originally posted by Luckyirish View Post
                            I know a lot of people want to walk away from their home, but if you do it after bankruptcy couldn't you potentially be at the risk of the bank serving you with with a deficiency judgment?

                            I'd be very careful about walking away from a home. In Florida, if you do that, you're pretty much going to get served with a deficiency judgment if you don't play your cards right.
                            First, do not post in old threads, simply start a new one. This thread was started in April, 2009.

                            Second, the opposite is true. If you received your BK discharge, you CANNOT be hold liable for a deficiency, or be taxed on it. The bankruptcy eliminates the deficiency regardless of when you walk away.

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