What to do with my house?

[soscared123]

I wanted to see what advice you all have for my situation. I'm waiting for my discharge. Did not reaffirm my mortgage. I owe $106,000 on my home. I have an interest only HELOC which I owe 65,000. Both loans are with my credit union. My home is worth maybe 165,000.

I would love to retire in 12 years, with my home paid off. It doesn't have to be this home…….I would be happy moving into a duplex or town home where I didn't have to worry about yard work, etc.

Do I stay and pay? Do I let it go? It was included in the BK. Do I hold on until I can sell it and pay off both loans and walk away with nothing?
I can afford both the mortgage and the HELOC payment. I just don't know what to do! I wish I could have stripped the second during the BK, but couldn't since the first mortgage was not under water.

Any advice, suggestions is welcome! Thanks in advance!

[justbroke]

I do not know whether you owe $106K or $171K ($106K + $65K) on your home. If it's $171K, then that's not too far to be underwater given the valuation you have of $165K. I typically like to see that people are not more than 10% underwater and you certainly would not be more than 10% underwater with those numbers.

Your only real issue is going to be how to deal with the $65K HELOC. I suppose it has a draw period and then a payback period... and then a huge balloon payment. That could be your downfall, so to speak. So long as you can afford either the new payment including a contribution towards the principal or to deal with the balloon payment at the end, I say go for it.

What do you have to lose? Nothing! You will discharge your (personal) liability to pay both loans (promissory notes) and could walk if something significant changed with your income at a future date.

[bcohen]

I agree with Justbroke. Other than the fact that you have an "interest only" HELOC, I'd say you are not "underwater" enough that it would make sense to walk. However, if the HELOC is going to require a huge balloon payment at the end, and you won't be able to pay said balloon payment, then I suggest exploring your options now. What you DON'T want to do is keep paying on these mortgages for several more years, then have the balloon payment come due, fail to pay it, and lose the house to foreclosure at that point. It would be better to cut your losses now, if it comes down to that.

[soscared123]

OK, I've got to pull my paperwork and see if I have a balloon payment.
Since both loans are included in my bk…….will I ever be able to refinance them?

Thank you

[justbroke]

OK, I've got to pull my paperwork and see if I have a balloon payment.
Since both loans are included in my bk…….will I ever be able to refinance them?

Now, that's the $1,000 question. IN general you should be fine so long as you can show that you continued to pay on time. However, expect some issues with refinancing or new financing in the future. The loans will show as IIB and some underwriting systems may count that as a foreclosure.