Please help! Stay or go??

**disneysteve** · 08-11-2013, 04:54 PM

Originally posted by blair0708 View Post

It is not large enough for another child...

How many kids do you have? Plenty of people with 2 or 3 kids live in tiny apartments. My cousins live in Brooklyn with 2 kids in an apartment with a hall so narrow that two people can't pass each other - one has to duck into a room to let the other pass.

My question is - Should we try to come up with the money and stay?? Or should we walk away and put that money toward a downpayment on another home and take advantage of this low interest rate? I would want to avoid a short sale at all costs; however, I'm not sure we could get what we owe on this house...

So you think the house is underwater. First step is to find out for sure. If you can sell it and break even or make a few bucks, you could sell it but then what? You won't have a down payment for another house so where would you live? If you walk away and default on your loan, you aren't going to be able to get another mortgage so then what?

I vote for staying where you are and saving until you can refi. If you post your complete budget, we may be able to point out places where you can save money that can go toward the house.

**Petunia 100** · 08-11-2013, 04:56 PM

If you walk away, how will you qualify for another mortgage? Is the mortgage in your name only, so that your spouse will be able to buy the next house in his name only?

If not, it will be several years before your credit has recovered enough to qualify to buy another house. By that time, your current home may be worth more and walking away would have been unnecessary.

Are you in a recourse or non-recourse state?

**Petunia 100** · 08-11-2013, 05:05 PM

If you walk away, how will you qualify for another mortgage? Is the mortgage in your name only, so that your spouse will be able to buy the next house in his name only?

If not, it will be several years before your credit has recovered enough to qualify to buy another house. By that time, your current home may be worth more and walking away would have been unnecessary.

Are you in a recourse or non-recourse state?

Also, keep in mind that under current law, forgiven mortgage debt on primary homes is not being taxed, but this will change after 12/31/13. If you stop paying your mortgage now, your foreclosure may not be final by 12/31/13. So, you are potentially looking at a tax bill.

In my opinion, it just doesn't seem worth it for the amount of money you are talking about.

There is talk of "Harp 3.0", which will supposedly be for everyone, not just those with Fannie or Freddie loans. This may or may not come to fruition.

I know the frustration of having outgrown your home and having no equity. I feel for you.

Nonetheless, I think your best course of action is to sit tight, organize your home to meet your needs as best you can, and save cash for your next down payment or prepay your present mortgage to the best of your ability.

**Petunia 100** · 08-11-2013, 05:08 PM

Oops, please ignore this one

**blair0708** · 08-11-2013, 05:43 PM

I appreciate all of the input...

So I think you're both saying definitely do not short sale, and my husband would agree. We have good credit and would like to keep it that way.

Petunia, I am going to look into the Harp 3.0. Thank you for that information. The mortgage is in my husbands name. He purchased the house on his own before we married. Because I am currently not working, I don't think I could qualify for a home loan on my own. We do live in a recourse state. We are in Michigan. I'm not really sure what that would mean for us though.

Disneysteve, we have just one child for now but we are hoping for at least one more in the near future. With these low interest rates, we could afford a much larger home and still pay the same per month; however, we CAN'T afford what we are paying right now but it's just the point I guess..We have considered listing it for sale but I just don't think it will sell for what we owe. We WOULD have money for a downpayment. I have inheritance money and I'm wondering if I should use that to pay the difference between what our house is worth and what we owe. That is 40,000. I hate to put $40,000 into a house that is "not worth it" according to our appraisal. Does that make sense? I just don't know if maybe we should try to take out a loan for $40,000 and hope to get a lower interest rate?

**LivingAlmostLarge** · 08-11-2013, 06:22 PM

How big is the house? Whats wrong with the house?

**blair0708** · 08-12-2013, 03:46 AM

Originally posted by LivingAlmostLarge View Post

How big is the house? Whats wrong with the house?

There is really nothing wrong with the house. It's a small ranch. It's just that with the 7% mortgage, we are paying way too much and could actually live in a bigger house, based on our monthly costs. Further, since I'm staying at home with our daughter we can't afford to be paying a 7% mortgage...

**disneysteve** · 08-12-2013, 04:16 AM

Originally posted by blair0708 View Post

we CAN'T afford what we are paying right now

We WOULD have money for a downpayment.

I hate to put $40,000 into a house that is "not worth it" according to our appraisal.

If you have money for a down payment, then you have money to refinance your existing home and make the payments affordable.

I am a relatively new stay at home mom and with one income, we are barely paying our bills.

since I'm staying at home with our daughter we can't afford to be paying a 7% mortgage...

You say that since you became a SAHM, you are struggling with the bills and can't afford your mortgage. I wonder if you both considered that before making the decision to become a SAHM. What did you think would happen when you stopped working? Was there a plan in place to make the budget work without your income?

**bjl584** · 08-12-2013, 04:41 AM

Originally posted by blair0708 View Post

With these low interest rates, we could afford a much larger home and still pay the same per month

HUGE red flag!

No you can't. A larger house might have the same payment so far as the mortgage itself is concerned. But, a larger home means higher utilities, higher maintenance expenses, and higher taxes.

It sounds like you bought too much house for your income. There isn't much you can do about it right now, but if you post up your budget we can help you trim the fat so you can start living below your means and get your head above water on your home.

**blair0708** · 08-12-2013, 05:09 AM

Originally posted by disneysteve View Post

If you have money for a down payment, then you have money to refinance your existing home and make the payments affordable.

You say that since you became a SAHM, you are struggling with the bills and can't afford your mortgage. I wonder if you both considered that before making the decision to become a SAHM. What did you think would happen when you stopped working? Was there a plan in place to make the budget work without your income?

You are correct. We did not really sit down and budget things. I wasn't making a whole lot of money, so we just figured it wouldn't make a difference. But we are learning that money is money and every bit makes a difference. We are now working on a budget...This is something I am working on really hard. I never realized how expensive children are. We are pretty health conscious, which makes things even more difficult, as the healthier food tends to cost more...

**blair0708** · 08-12-2013, 05:11 AM

Originally posted by bjl584 View Post

HUGE red flag!

No you can't. A larger house might have the same payment so far as the mortgage itself is concerned. But, a larger home means higher utilities, higher maintenance expenses, and higher taxes.

It sounds like you bought too much house for your income. There isn't much you can do about it right now, but if you post up your budget we can help you trim the fat so you can start living below your means and get your head above water on your home.

That is a good point. I just keep hearing people say stuff like - "you should really take advantage of the low interest rate. It won't last..." So it makes me think we are throwing away money staying here...But that is very true. Bigger house does mean higher bills. Oh and more to clean (for me...)

As far as too much house for income - We live in a VERY modest home in a VERY modest neighborhood. We have a small ranch in a much older neighborhood. My husband purchased the home at the height of the housing market. They then let him refinance for way too much. He makes a very good income and has never had a problem affording the home, paying bills, etc. We both have outstanding credit...He always hated paying such a high mortgage and it is dissapointing that 1.) the house isn't appraising and 2.) we aren't backed by Freddie or Fannie, so I guess no help for us. We have taken great care of our home and have put lots of time and money into it, which is not paying off, but who knew that 8 years ago....

How do you post a budget? I wouldn't mind posting it.

Thanks!!!

**riverwed070707** · 08-12-2013, 05:24 AM

Originally posted by blair0708 View Post

There is really nothing wrong with the house. It's a small ranch. It's just that with the 7% mortgage, we are paying way too much and could actually live in a bigger house, based on our monthly costs. Further, since I'm staying at home with our daughter we can't afford to be paying a 7% mortgage...

You've been in the house 8 years. The payment isn't new. Its not that you can't afford the interest on the mortgage, its that you can't afford to stay home. While its not what you want to hear, staying home is a luxury not everyone can afford. Find a good daycare and go back to work so you can pay your bills. Walking away from your home isn't the answer, and talking about upgrading when you can't afford the home you're in is foolish.

Originally posted by blair0708 View Post

You are correct. We did not really sit down and budget things. I wasn't making a whole lot of money, so we just figured it wouldn't make a difference. But we are learning that money is money and every bit makes a difference. We are now working on a budget...This is something I am working on really hard. I never realized how expensive children are. We are pretty health conscious, which makes things even more difficult, as the healthier food tends to cost more...

Children are only as expensive as you make them -- buy second hand, only get what they need. Babies don't need gadgets and toys and electronics. Healthy food doesn't have to be expensive either. Meal plan, shop in season and sales and cook from scratch. Do a few meatless meals a week -- super budget friendly and healthy.

If things are tight, cut back some non-essentials. Get rid of cable TV, stop eating out, scale back the phone/internet plans, etc. This forum is great with budget help. If you post here, they often have great suggestions for getting things back in order.

**riverwed070707** · 08-12-2013, 05:26 AM

Originally posted by blair0708 View Post

How do you post a budget? I wouldn't mind posting it.

Thanks!!!

Just make a list of your income and expenses. How much are you bringing in, how much is going out and where is the out going?

**blair0708** · 08-12-2013, 05:41 AM

Monthly Income $4,400.00

Monthly Expenses
Housing $1,827.00
Electricity 135
Water 75
Cable 117
Phones 147
Car Insurance 142
Car Payment (thru May 2014) 344
Car Payment (thru October 2013) 321
Gym Membership 81
Trailer Payment (thru October 2013) 118
Lawncare 100

Total Expenses 3484
Amt for Groceries, gas, everyday living 917

Once we pay off our car and trailer in October, we will have an extra 321 + 118 a month. Once we pay off our other car in May we will have an additional 344 a month. That is going to make a world of a difference. Things will just be tight until then. Youre probably thinking, cancel the gym membership, but I would hate to because we are locked in at a great rate and my daughter loves going. The lawncare we should cut out...

Any other suggestions would be helpful. We have TOO MANY bills right now...

Please help! Stay or go??