patrick.net

you took some risks, it didn't pan out as planned. Wants and needs. wants and needs. if you confuse these you may be in trouble. of coarse get employed or change your lifestyle. you can rent yourself right? land lords can rent too,..no shame in that. if you can't pay then don't.

you need good shelter. you don't need a mortgage (you just want one)

Well, teh small house was two bed, we have a boy and girl. We used the basement for our bedroom when they got bigger. My husband is a carpenter, so his work has slowed too. I got a Masters in library science to change careers, right before the crash, which has reduced the need for librarians. These houses are modest, I think we just had bad timing. It seemed like the bottom was two years ago when we bought the bigger house on "sale". Renting out the first, since we built up equity seemed wise.

They don't teach investing or real estate in library science.

Bust thanks for taking the time to write me.

Sounds like you're taking a pilar out this side, putting it another side hoping that will keep the roof from collapsing. But you knew that's not the real solution. Your rent income 1400/mo is barely enough to keep up with 1300/mo plus costs. And you knew you will need money which you don't have when furnance or roof finally give up on you. What's gonna happen when your loan rate resets?

You don't have enough income as you lost your job. Even if you have a job, having two homes at the same time is quite hard w/ teacher's salary, and you're still want something bigger. Nope, that's not gonna happen when you're financially not stable enough.

Put a hold on your hope, want or need whatever that is, and get rid of one of two houses. Get your finance in line first, then resume dreaming later. Your kids need a home to stay, not two homes their parents can't even handle.

Mr.Fantastic says

I hope you don’ t teach personal finance, or responsibility.

anyone who does teach this is also in trouble I'm sure (The Va jay jay has demands). remember all the experts seemed to get it wrong too.

The only ones I can see who benifited from all of this are those who got out before 2006 (sold)
or never played ball because they couldn't, or didn't want to.

remember sometimes doing nothing ,except saving money , is the best plan IMO! (try and tell that to the Va jay jay though)
bla bla bla!

I dont think you made a bad decision.
Of course keeping both houses would be ideal but if you're counting on appreciation that probably wont happen any time soon. If you're in a bind I would sell the smaller house.

SF ace says

Plus home equity loan 90k, 5.6% interest (variable rate!!!) currently $230/mo.
HELOC of $90K at 5.6% is not $230 a month. You’ll have to clarify the facts regarding your both your loans further to be of any aid.

Maybe it's some sort of creative HELOC where he/she can pay less than interest rate or there is no interest rate for the first few years which means that once it gets refied it will balloon significantly.

Yes csj please clarify the amounts better, just like I asked you in the Misc forum.

If you had just the one larger house & 40K in the bank, would you take out the other mortgage & heloc to buy the smaller house at 225K at this point? If not, then sell.

If you were paying all of the interest on the heloc, the mortgage on the heloc should be $430 or so. So, you are really losing $100 per month excluding paydown on the first & appreciation. So, you are taking on a good bit of risk for not much benefit. Only you can assess the amount of risk (how close you are to losing the bigger house).

One thousand dollars per year in flood insurance? Where do you live? Venice? Does "CT" stand for Cannareggio Territorio or something?

Your first line "Basically, we want our new larger house," gives off an impression of you trying to convince yourself to stay in a house that's not a good choice, financially.

How much could you get for the bigger house if you sold it? $2070 is a lot to be spending every month when you only have one income. Any chance you could sell that house and move into the smaller house if the renters leave? Then you could pay it off entirely, have total peace of mind, and put that $2070 towards a future home, renting out the smaller one with no worries at all about payments.

As I see it, I would sell the rental and pocket the cash ASAP. The variable rates and positive equity is what sways me. The fact that you are in a house you want to keep that has a fixed rate mortgage on it would make me want to stay there.

All underwater homes will go to foreclosure including yours. Begin squating now.

PockyClipsNow says

All underwater homes will go to foreclosure including yours. Begin squating now.

See, this is total BS. There are plenty of us that are slightly underwater on homes we enjoy living in, with expenses that are still less than renting in the area. My current mortgage balance is only about 1.5 times our yearly income, we have no debt outside the mortgage, and are saving an average of 25% of our income right now. Why would we have a foreclosure over about 30k underwater (on a 200k+ house, in an area where homes continue to sell quickly)?

No job? Only renting makes sense.

I will modify my statement to say:

All homes more than (you decide percent) underwater will go to foreclosure.

I have seen many, many homes that sold as short sales/went to foreclosure even though they had zero negative equtiy.

It costs 7.25% in realtor commission/escrow fees to SELL a house. So you people 'slightly undawata' when you go to sell you actually are 7.25% more underwater than you think. Then you get to the closing table at escrow and you cant cough up the 70k to cover the shortfall - sooooo its a short sale or a foreclosure... all because you dont have 107% equity.

Seriously no one brings cash to closing anymore unless you are quite well off.

So to answer Tude's question why would he go to foreclosure when he is 20k underwater?

#1: must move due to job change/divorce etc and you dont want to rent at a loss so you let it go to foreclosure since you wont cought up 20k+ to SELL a house due to neg equity.

If tude says 'i can rent my house out and break even or make small profit' then buys another home he will be in THE SAME situation as the Original Poster.

Life happens. underwater asset is unsellable!!!! get it!?

Sure, there are reasons, but you argue that ALL will end in foreclosure. I have no plans to move for many years and live in an area where my skills (and that of my husband) are in demand, so much so that I was just given a promotion and raise to retain me. We also have a fixed rate mortgage and are actually paying off the house.

I know plenty of people in my situation. And like you stated, it costs a lot of money in commissions and fees to buy/sell, so it makes no sense for me to do so. Even if I found a house slightly cheaper than I have, the difference would be made up in commissions, fees, and the fact that my property taxes would double or more (since I have low taxes due to prop 13).

There is a lot more to making financial decisions than gut instinct.

Mr.Fantastic says

I hope you don’ t teach personal finance, or responsibility.
All of your plans are contingent on your finding employment. I think you should concentrate on that first.
Given that, get rid of the house. Sell it for a loss now, than a bigger loss later. I hate to even suggest a short sale since I consider them moral hazard, but you’re pretty far up shit creek, all your own doing of course.

Man I LOVE the 'harsh medicine' (and bullshit) advice these poor suka's get on this board! So Fun!

I feel like its 1995 again when I was working for countrywide in the loss mit department! Man those were the days (everyone underwater and confused as hell what to do! just like now...)

The best advice here is from RobertOrbibas(knows his shit), then Katy Perry(also knows shit but is a smart aleck and funny), then APOCAYLPSEFUK who I havent seen in a while (does the bunker have internet access? Or the zombies got him finally?) lolz.

This blame game on the 'VaJayJay' is making some people seem a little bitter towards the opposite sex.

I think it boils down to a few things:

1. Equity in small house is 40k right? 225k or so minus the two loans?
2. Equity in the large house is 70k - selling costs? Basically the down payment back assuming house hasn't gone down in value (I have no idea if this is the case).

Being unemployed, you shouldn't be leveraged. What's the benefit of owning the rental house at this point? It's cash flow negative and a clear pain. The rent doesn't cover the costs...in fact it sounds like $1400 rent on a $225k house that the house is still probably overpriced.

Easiest thing to do is sell the rental house...all things being equal sell it to who's renting it. That way you both save on commissions. Maybe talk to the tenant and see what their plans are.

Take the 40k, save it. That should give you living expenses for a year to see what happens. Be prepared to sacrifice the main house and start renting if needbe. No one 'needs' to own a house. I don't know how big your family is, but it's not the end of the world if the kiddies split a room. Are you married? Just 2 kids? A two bedroom apartment is fine. Or even better is renting a house...but selling the main one and renting involves selling costs, moving costs, etc. and probably easier to do one house at a time.

Good luck. Remember these rules about houses:

1. Don't trust agents...they're snake oil salesmen
2. Dont' be a landlord unless:
a) You have a lot of spare money and want the yield- basically you buy the house almost entirely in cash or
b) You're a real estate expert...and there are 10 people who think they're experts for every 1 that is.

SF ace says

My feeling is you should hunker up and sell the big house and live in the smaller house with the much smaller obligation. A master degree in libary sciense is useless as the 21st century library is called the internet and it’s not going back. But if you’re confident that you can make some money and find a job soon, don’t let anyone stop you from keeping the bigger home. I don’t think you have the financial stability to maintain two homes and make it through the housing upcycle to benefit from owning the rental.

2 bedroom and a den is big enough for a family of four, the proceed from the bigger home should be kept in the bank to hedge against interest rate risk. But the facts are so limited (at least look up the value of your 2009 property purchase) that I can’t advise correctly.

Agreed. Less debt it better. A small family can do just fine in a 2 bed. Don't worry about keeping up with the Joneses... Get rid of some of the stress, put a little cash in the bank, and find a job.

The problem is the OP has a fixed rate mortgage on the bigger house, and TWO variable rate mortgages on the smaller one. I would not dump the bigger house for the smaller one unless I could refi the smaller one into a fixed rate mortgage.

If the smaller house has a fixed rate mortgage on it, then keep the smaller house and sell the bigger one.

Mr.Fantastic says

I hope you don’ t teach personal finance, or responsibility.

Ben Bernanke's house was underwater too.

He pumped Billions of dollars into the financial systems to keep the house bubble going, so he can sell his house to break even.
Instead, the food price doubled and tripled, and millions of people stave to death.

Sad but true.

THE SCHOOL TEACHER SAYS:

SF ace, sorry the 90k is at 3% and has been for years... the mortgage of 88k is at 5.6 or so. So on the small house two mortgages, the original still has 88k left--a total of 188k. house worth 225k or so.

I'm not sure how much the bigger house has depreciated. I assume 10% is prob close and we put 20% down...we live in the outskirts of where some would commute to NYC. So prices are high, for small space.

At the time, the rent mentioned by the agent for the small house would have more than covered the mortgages and paid a third of the new house. It sounded wonderful. Then in the future we'd own two houses. We had the first one paid down to 88k and it seemed like we had the ability. Times change.

In case the OP hasnt heard of this site:

YouWalkAway.com

Mr.Fantastic says

I think the lesson learned here is “don’t listen to the VaJayJay” when it comes to financial decisions, specifically buying homes.

Right, cuz no man could be responsible for making a bad financial decision.

You're lame contributions to the conversation only prove that men can be stupid too.

You don't see this guy blaming his problems on his lady.

Ptipking222 says

You’re a real estate expert…and there are 10 people who think they’re experts for every 1 that is.

Did you have any particular duck in mind?

Mr.Fantastic says

E-man says

My condolences to your situation,

I love when people misuse words. Or maybe E-man really does support HELOC abusers and feels their deep grief and mental anguish. We should all start a fund for cjwest, for her great loss.

Its like a cult. Once you have a mortgage you are sympathetic toward other mortgage takers regardless of other different circumstances.