patrick.net

So like most Americans we have lost value on our property, but unlike most Americans we did not buy more than we could afford at the time. We don't live in a lavish house or have a lot of space, quite the contrary we live in a 670 sq ft condo, which the size in itself is the main problem. The thing is we are in our late twenties and want to start a family, but we know that in our current property that would be impossible, even with the size factored in we also live on the second floor, which is not safe for a baby. I should also add that with such little space all of our wedding gifts have been sitting in storage for over a year, kinda sad!

So let me give you some details so you can help us make a wise financial decision on what to do with the property. The property is in my husbands name, not mine, however of course we share all finances and this is my problem too. He bought the condo in 06, before we were married for $305k, we pay $330 a month in hoa dues (all we get out of that is a few pools, but no gym, etc) and the complex was built in the 70s and still looks like it did then. We have a 1 bedroom and 1 bath. All in all we pay a little over $2k a month in hoa, property taxes and both our first and second mortgages.

Of course you can obviousely tell at my frustration that we want to move into something bigger and at least rent for a while until property values deflate. The first thing we did was to call our bank and ask for a short sale. Of course... we do not qualify for a short sale since we can easily make our payments. The second thing we decided to do was to sell at a loss, we agreed between the two of us that we would pay $30k out of our savings to get out. So we called up a local real estate agent that lists many of the condos in our area and he gave us some bad news. The first thing he told us was we would not be able to sell this place for more than $200k, and the second thing was that even at that price the house may sit on the market for a year. So that option is out, we can't afford to pay out of pockett $100k or more! The only other option possible is to rent it out. However, if we rent we'll get an agency to help us which will take 10%, and if we can find a willing renter we can't expect to get more than $1100 each month based on rental comps. So we will be left to pay the rest of the mortgage. Every month we'll have to pay out about a grand just to keep this sinking ship... money that could be saved for retirment, for our childrens college educations, and to help our parents out when they are elderly. I should also mention another fact... if we decide, and are ever able to afford another house again, if you own a house that is underwater the bank considers you high risk regardless of a good credit history and score. That means we would need to put 20 to 25% down on the second home and we would have to qualify for the new mortgage factoring in what we pay for the current condo and they won't count rental income toward what we can purchase. So basically unless home prices plummet we'll never be able to afford to buy a home if we rent this condo out at a loss every month.

So you may be thinking what about foreclosure. I've thought about it, but frankly my husbands credit will be screwed and as the bread winner in our family we need him to have good credit if we want to buy anything ever again. He also at some point may want to apply for a security clearance and I have a feeling that would disqualify him from obtaining one.

I feel like every option is bad, every way we lose even though my husband was not irresponsible. At that time he qualified for a bigger loan which would have equalled at least another bredroom, but was worried that he would not be able to make the payments so he took the smaller condo thinking that we would easily be able to sell a couple years later even with a small profit. I'm looking for advice... I'm not sure if you have any but whatever you have got please help. We can't continue on in this small place for much longer, I've been wanting to desperately leave for over a year, but we have been waiting for the market to recover (that's a long shot).
Thanks!

#housing