Mortgage change problem

[Radiance]

I have to agree with anonymous saver, the things you had to do to pay back are not sustainable, think on longer term, how will you make the payments now that you have cashed out on emergency funds?

I refuse to even get into credit card debt to pay mortgage because that will only last until my cards max out. Then what?

I am paraphrasing some articles I've read here:
You are not your house, not keeping the house is no reflection on you being a better or worse person.
There are multiple benefits to renting vs owning.
Including the fact that there are several investing strategies that are much more profitable than any real state investment.

Try to detach from the house. I know you want to stay out of the city.. can you rent a place in the area you live now?

If not, you can minimize impact in your mental health by adjusting your view of things, who know? Maybe the move will be positive for you family, for you.

My concern now is how to let go of the house without affecting your kids. I would guess being late alrady affected their credit? How about a short sale?
I would have a freee consultation with a real state lawyer.

All the best!!!

[AlligatorBaby]

It's a tiny 1960 three bedroom,

I think someone thought the 1960 was the square feet, not the year it was built which is what I think you meant...

[Alex_Adviser]

In my personal opinion, if your daughter doesn't want to be a part of the Loan anymore its better not to make her indulge into it. Work out with the bank, maybe you can come out with some positive results favoring you. And if the bank feels that you cant afford the home anymore its better to accept it. Its useless to continue to struggle to pay mortgage for a home that you cannot repay back.

Be clear with the bank while negotiating about the new situation and be transparent. I strongly feel that something or the else could be worked out.

[Junebaby]

Latest Development

We heard from the bank that holds our mortgage.
1. We can pay interest only for 12 months, which means treading water for a year.
2. Re-amortize to 40 years. This will not lower our monthly payments as much as #1.

Interest-only option (#1) means less due each month, but one year longer to pay it all. Lower monthly rate (#2) is less savings each month, but for the life of the loan, but the loan is 10 years longer. We'll be selling again in 15 years maybe, and moving to a more temperate climate, but it will be less profit with option #2.

I guess we could change again in the future, and I hope someday if I get an inheritance that I will be able to make an extra payment against the principle.

Anyway, I think we will take option #1.

Thoughts, anyone?

[creditcardfree]

My first thought is that paying interest only is a better option. This gives you breathing room while you find more income. The only downside, is that you may be in the same situation next year.

Reamortizing over 40 years just sounds awful!!

[Junebaby]

Future money

You're right, creditcardfree, we will likely have the same problem next year. If the change to a 40-year lowered our payment by a lot more, we would take it. The only way out of this is more income!!

[TBH]

Does either option include getting your kids off the loan?
That seems pretty important.

I think you should go with option 2 and try to get more work so you can pay extra on the loan each month. But not before you build up an emergency fund so you don't get into this position again!

[Junebaby]

Kids

Our Son will be on the mortgage until he moves out or we sell. At least, that's the plan for now. Our Daughter, who is engaged, will be off before her wedding. But we're afraid that the bank will foreclose on us when we do this. In the meantime, I AM looking for work, but in my field. If I don't get a job by the time the unemployment runs out, I will take almost anything. And Husband and I are doing the flea markets. He got a box of post cards for $20.00 at an auction. We can sell them at 3 for $10.00. There are maybe 400 cards! We sell other stuff too, that's just our most recent find.

[b4freedom]

Here's what I would propose to your daughter and her fiancee. She has a financial stake in the house, period, no way around this. Now give her an equity position. What I mean is that you should offer to put her on the title. Make her part owner of the house. If you need help with payments, as her for help once in a while, or even set up some recurring payment schedule where she contributes with $100 or whatever she can afford, to ensure you don't fall behind again. She can also share in the mortgage interest deduction when filing taxes, so she can get some of that money back.

Make an agreement between your daughter, your husband and you that, when things pick up, you will sell the house and she will be entitled to some percentage of the profits. Let's say that in the next 4 years she contributes $5000 in mortgage payments. Offer her a $10,000 steak in the house. When you sell, if you're left with $50,000 in profit, give her 10k and keep 40k. That's a 25% return for her year over year, which she can use as a downpayment on her new home. Then you and your husband can downsize to something smaller and cheaper, where you can afford to finance it on your own.

I did something similar with my mom. She had been renting a house for $1100 for about 7 years. I offered the landlord to buy the house from her. My morgtage payments were $1600, so i wrote my mom a check for $500 each month, so combined with the $1100 she'd already been paying in rent, that covered the mortgage. However, when the 1098 statement came in with the mortgage interest, I used the entire amount on my taxes, which gave me about a $5000 return, so I got back almost all the money I gave her over the year. She got to own her new house. And when it was sold, she kept all the profit. I didn't ask for any of it, but that was just our situation.

Ernesto

This is outstanding advice. Unfortunately, I doubt it’ll be followed.

What’s even more unfortunate is that the parents have financially doomed the children.

[Junebaby]

Did I not explain properly?

This is outstanding advice. Unfortunately, I doubt it’ll be followed.

What’s even more unfortunate is that the parents have financially doomed the children.

My kids are ON the title. It took ALL FOUR of us to convince the bank. YES I KNOW I AM AN IDIOT for doing that, and for letting Husband talk me into this house instead of looking for one cheaper. I don't have a time machine. If I sound rude, I'm sorry. It's just that I'm so furious with myself.
Son is living with us, so he is HAPPY to pay us one paycheck a month plus a little extra for "whatever"; sometimes groceries, sometimes laundry, sometimes heating fuel.
Daughter had NO IDEA she would be engaged this soon in her life, and we will get her off before the wedding.

I still think if they stay with us until our income goes back up, the credit reports on all of us will begin to look better, no?
And I don't buy the statement that I have "doomed" my children. Injured, yes.
Again, I am furious with myself for getting into "Another fine mess".