I live in NJ-my wife and I filed CH7 BK in November 2012 due to unemployment and high credit card debt. We were overextended and my wife's job loss sent us over the edge-we were discharged in March 2013 and things have actually improved dramatically since then. My wife has found steady employment in September and I was able to find a higher paying job about a month ago, and now we have no debt besides student loans and our mortgage, which was included in the BK, so we're really just paying to stay here.
The house is underwater by about 20% and shows no signs of improving-real estate values crashed here in 2008 and have flatlined ever since. We are saving money, investing, and basically getting off to a great start post BK. However, it is killing me to throw money at this house. It's a two bedroom, one bathroom ranch that was great as a starter home, but with one child here and the desire for at least two more, it's not going to serve our needs. Our plan was always to add on, but putting an addition on a home that's already underwater is not a good idea. Right now we owe about $230K and the home is worth about $185K-even if the house improved steadily at 2% per year we'd be at the break even point in 5 years, so it would be going back to square one, 10 years after we bought the place...
Basically we're just trying to figure out how to get out from under this house in a smart way. Obviously we could stop paying our mortgage tomorrow and start banking the cash. A year's worth of mortgage payments for us is about $26500 (taxes included), so if we were able to string it along for two years we could have $53000 cash at the end of it. The issue then becomes, can we buy a new home with that with a foreclosure on our credit reports? At least the way I understand it, though not paying the mortgage cannot affect our credit, the foreclosure is still a black mark. With the clock having already started on the BK discharge, I'd hate for a foreclosure to set it back. That said, are the other options open to us that would have little or no credit impact? Deed-in-lieu? Short sale, etc...?
The house is underwater by about 20% and shows no signs of improving-real estate values crashed here in 2008 and have flatlined ever since. We are saving money, investing, and basically getting off to a great start post BK. However, it is killing me to throw money at this house. It's a two bedroom, one bathroom ranch that was great as a starter home, but with one child here and the desire for at least two more, it's not going to serve our needs. Our plan was always to add on, but putting an addition on a home that's already underwater is not a good idea. Right now we owe about $230K and the home is worth about $185K-even if the house improved steadily at 2% per year we'd be at the break even point in 5 years, so it would be going back to square one, 10 years after we bought the place...
Basically we're just trying to figure out how to get out from under this house in a smart way. Obviously we could stop paying our mortgage tomorrow and start banking the cash. A year's worth of mortgage payments for us is about $26500 (taxes included), so if we were able to string it along for two years we could have $53000 cash at the end of it. The issue then becomes, can we buy a new home with that with a foreclosure on our credit reports? At least the way I understand it, though not paying the mortgage cannot affect our credit, the foreclosure is still a black mark. With the clock having already started on the BK discharge, I'd hate for a foreclosure to set it back. That said, are the other options open to us that would have little or no credit impact? Deed-in-lieu? Short sale, etc...?
Comment