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Andrea, Other/Just Looking in Grand Rapids, MI

My fiance and I currently own 2 homes, 1 purchased 4 years ago with a 5 year ARM that we rent out, and the

Asked by Andrea, Grand Rapids, MI Fri May 16, 2008

other with a 30 year fixed rate mtg. We are having a hard time trying to get our renters to pay up every month, but our getting about a 1/3 of the rent from the city of GR. We got a mtg statement the other day that was $200 more than usual. Turns out Wells Fargo wasn't taking enough money for escrow and now we are $2000 down. This payment has now put us on edge. I am not sure what to do. We know we need to re-finance eventually, but are also trying to figure out a way to just walk away from this other house~anybody with advice~please help us!

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Andrea, Some good suggestions.

Alternately, If you need some assistance with your rental property, I suggest checking out your local Real Estate Investors Association (REIA). Or, you can try http://MrLandlord.com

Just in case, here's renting information from the State. http://www.legislature.mi.gov/documents/publications/tenantlandlord.pdf

I would be very hesitant to just trying to walk away from either home.
0 votes Thank Flag Link Fri May 16, 2008
First you need to get the renters out and find a good paying tenant. That way you can make your payment. I would suggest this before dealing with a rate change that is not here yet or walking away. Your taxes more than likely went up because the home is non owner occupied now. This is something people do not consider before renting their home. But don't think monthly think Long Term. You can write off the property taxes, you can write off the interest and a tenant will be paying your mortgage down. Think 10 years from now not monthly. The market will turn around again.

Now as suggested calling Wells Fargo will help switch you to a fixed but will not help you make the payment or reduce the extra $200. Also, there may be closing costs involved and you may actually end up with a higher payment. This should not be your concern now it should be making the payment and saving your credit.

As for walking away as long as you understand this will hurt your credit now and in the future. It would be best to get someone in there to help you make that payment. As for a short sale the bank will check many thing before allowing one. Before they take a hit they want to make sure you have eliminated all other options. Have you attemped to sell? Can you afford both payments? Do you have funds in savings? They will ask for a very detailed financial statement. Doing a short sale is always an option but you can not do one unless you have an offer and that requires selling the home. This may be difficult if you have a tenant. Besides a short sale will still effect your credit.

Again, I would suggest getting a new tenant and thinking about your future. Call a local real estate agent and ask them to list the home for lease or lease with option. They can help you with the lease/option, pricing and credit for a small fee.

You are just starting out and you will need your credit. Hope this helps.

Cindy Knight
Realty Executives e-Group
0 votes Thank Flag Link Fri May 16, 2008
I would talk to your lender about a loan modification. I know a mortgage professional will probably pick up on this question to better assist you with a loan modification. You'd be surpirsed what lenders are will to do to help you keep your home. It can help get you over this rough spot.

But, it sounds like you really would rather sell it than keep. Put it up for sale ... contact 2-3 Realtors and see what they feel is the value of your home. If they don't think they can sell for what you owe, a short sale is another route. Just make sure your Realtors have dealt with them before. Here a good website for helping you determine what you can do in this situation: http://www.hud.gov/foreclosure/index.cfm

Let me know if I can help find you a Realtor in your area.

Best of luck,
Lisa Bender
0 votes Thank Flag Link Fri May 16, 2008
Before you walk away, call Wells Fargo and have a chat. Tell them your thoughts, they will possibly offer you to refinance out of the Adjustable rate on the rental. Also I would send an certified letter to the renters telling them to pay in full or get out. Walking away should be a last resort.
You can also call another lender to refinance.
0 votes Thank Flag Link Fri May 16, 2008
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