Foreclosure in Mesa>Question Details

Jeff Moss, Home Buyer in Mesa, AZ

Why would I keep my house if I am so upside down in it?

Asked by Jeff Moss, Mesa, AZ Wed Oct 29, 2008

I bought my first house 2 1/2 years ago for $225,000.00 and had to do a 80/20 in order to get approved for the loan. My neighbor next door is selling his house which is a one bedroom bigger then mine for $119,000.00. I have great credit and understand if I do a short sale it will hurt it but I don't see my family living in this house for another 5 years. Plus in another 2 1/2 years my ARM will be up and I will have to pay more in interest.
Why not just do a short sale and get out of my house and start over in 3-5 years with another house?

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I think what Bryan said was such a great answer. The rental market is strong and it's a good way to sit out this real estate mess for the short-term. The prices will come back, but it's going to be several years. Enjoy your great interest rate for another 2 1/2 years, rent it out, take some tax deductions (all your mortgage interest and taxes will become tax deductible) and then make the decision in a few years based on market conditions at that time. You can always refinance the ARM, today's mortgage rates are still at historical lows.

We get houses ready to sell or rent by performing repairs and maintenance. A house with a fresh coat of paint and inexpensive window coverings along with a nicely manicured lawn will rent out quickly. We service the East Valley, call us if you decide to pursue this option and we'll work with you, your realtor or your property management company to determine what will improve your homes appeal. Good luck with this tough decision! Gina
0 votes Thank Flag Link Sat Nov 1, 2008
Again, I have heard this from many people, what should I do? First off, can you continue to afford your home? If the answer is yes, a lender will most likely deny the shortsale unless there is another reason such as a job transfer.

Second, most lenders today require you to be a minimum of 2 or 3 months delinquent before they would consider a short sale...again this is a general rule. So not only do you ding your credit for selling under what you owe but you also ding your credit for three 30 day lates, two 60 day lates, and one 90 day late. Then you take on the short sale itself which will hit your credit almost as bad as a foreclosure.

Simply put, your credit will suffer tremendously for up to 7 years. It will negatively impact your ability to not just purchase a home, but get auto loans, credit cards, and other lines of credit. It may even affect future job opportunities as they are now starting to do credit checks. Now those who have no options this will always be better then foreclosure but only should be used as a last resort.

I express deep caution in bailing on your home. It will affect you in many more ways than one may think.

Consider alternate options if needed, rent the home. I don’t know the market in Mesa, but I know many places rent has climbed significantly the past couple years. You may be able to rent the home for around your monthly payment (and you may not). But then consider buying one of the less expensive homes as an investment. If prices have come down that low you may be able to pick up a couple of good rentals to offset the losses on the home you are in.

There is no one answer to your situation. All I can recommend is you do not short sale on your home unless you have no options. Second, if the opportunities are that good in your town, consider doing the opposite and pick up a couple of investment properties. Look for those who are selling their homes via short sale and make some low offers.

Hope this has helped in some way. It’s a tough market to sell but a GREAT time to invest.
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0 votes Thank Flag Link Wed Oct 29, 2008

This is the situation of many home owners today. There are options, if you havn't checked with your bank please do so. If they can give you a much lower payment it would be a better option.

No one knows what the market will be like in five years, hopefully your house value will be back.

Please know all your options! Feel free to contact me at your convienience and we can go over this!

Lucinda Tkach
Windermere Central LLC
0 votes Thank Flag Link Wed Oct 29, 2008
You might of answered your own questions, much of this is personal.

Will your home be worth what you owe on it in 5 years?

If not will you be able to come up with the difference at that time?

Are you ok with damaging (trashing) your credit for a few years?

I would like to speak with you in person about a couple of other items that should not be discussed publicly on a forum such as this.
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0 votes Thank Flag Link Wed Oct 29, 2008
That seems to be a strategy many people are considering. If you consider the consequences of doing what you propose and they are not too excessive then, maybe, just maybe...
0 votes Thank Flag Link Wed Oct 29, 2008
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