What would you do? New job forcing relocation / upside down.

Asked by Ohio_bound, 32259 Sun Apr 11, 2010

I took a new job that is requiring me to relocated from the St. Augustine, FL to Cincinnati, OH.

We just closed on an FHA streamline to get our mortgage down to 5% fixed. The development is still under construction, and the builder has significantly dropped their prices for new construction.

Based on my realtor's estimates, they seem to think I would need about 30K to sit at the closing table or go through a short sale.

So my options seem to be:
1) Short sale
2) Find someone to assume the mortgage
3) Rent it out and buy a place in OH and let the chips fall where they may (short sell the FL house or foreclose).
4) Rent it out for awhile and pray the market turns around (not big on being a landlord)

Advice in this market? What would you do?

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gabriel palo…, Agent, Pompano Beach, FL
Fri Apr 16, 2010
Just an other footnote. For those that are in the same situation and relocating. like Ohio.
Rent in your new location first, modestly and save. Do not be in a rush to purchase .
Get to know the area first, you will find the right opportunity and the right time to buy. Do not sacrifice your present home or be forced into a short sale if you can hang in there.
Rent your property fairly or for less to the right individuals who will appreciate it by maintaining it and respect you by making payments on time. You will benefit in the long run. The sky is not falling take a hold of your senses do not capitulate if you don't have to. You owe it to yourself.
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gabriel palo…, Agent, Pompano Beach, FL
Fri Apr 16, 2010

My personal opinion is take the rental. I am a contrarian and I would take the risk. The dollar is facing some major challenges what you will be able to buy with it will be questionable.. It would make buying a home and borrowing even more difficult in the next year. The rental market on the other hand is more robust and has a future. More and more good people are on the fence and will rather rent in the next two years than buy. They too are patient.. This will be good news for those that have an affordable home to rent. This could be you?
Whatever you choose to do there is risk. I choose to wait out this market with patience and benefit from it in a relatively short time. Many may disagree with my point of view. That is why I think for myself and not let others think for me.. What do they have to loose.?
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Emelia Sanch…, , Ontario, CA
Mon Apr 12, 2010
Hello Ohio-bound,

1. Fha loans are for owner occupant homes and renting it out may get you into trouble.
2. The new HAFA excludes FHA.
I recommend you call your lender and advise them what your circumstances are and let them advise you what options you have. I believe your circumstances are not typical of todays distressed homeowners and options that may be better for them may not be better for you. YES on speaking to your CPA don't forget to inquire about debt forgiveness and let them know the date of your purchase loan. YES on continue to make your payments if you afford to do so.

Good Luck!
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Debra B Albe…, Agent, Port St Lucie, FL
Mon Apr 12, 2010
Ohio Bound-
If you want to consider a short sale option, you MUST contact your lender right away. There are some new rules in place that can help you get the approval before it is on the market. It is a possibility, not a definate. Your lender will guide you. To qualify for a short sale, you must provice the following information to your lender ahead of the listing paperwork:

1. Hardship letter - explaining why you can not continue to pay the mortgage - remember...no hardship, no short sale.

2. A completed financial statement - this is a total personal financial statement which will need to include your monthly income, monthly expenses (all of them)

3. Last 2 years of pay stubs

4. Last two years W02's/1099

5. Last two years tax returns

6. Last two years of all bank statements

7. Any supporting documents as evidence of hardship

Please contact your lender first. Do not let them tell you that you have to be late on your payments, this is no longer the case in most circumstances.

We certainly wish you the very best - are you sure you don't want to rent?

Debbie Albert, PA
Coldwell Banker Residential
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Ohio_bound, Home Seller, 32259
Mon Apr 12, 2010
Thanks for all the help so far.

I've never owned rental property before, and extremely hesitant to do so.
The new employer might help with relocation, but I'm not counting on much.
A CPA might be helpful.

The bottom line is that we're trying to use my new job opportunity as a place to start over and cut ties with Florida (we're recent transplants from the northeast).

If I went through a short sale, would I still have to pay the mortgage?
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Keith Sorem, Agent, Glendale, CA
Mon Apr 12, 2010
I have been in the same situation.
Have you ever owned rental property before?

"We just closed on an FHA streamline to get our mortgage down to 5% fixed. The development is still under construction, and the builder has significantly dropped their prices for new construction."
This is a confusing paragraph. So you are under contract to buy a home in Florida? The value has dropped $30K since you signed the contract, but the development is not yet completed?

Talk with a CPA who can explain the implications of your choices on the taxes.
Assuming you could rent the property it might be a tough road for the first few years, but in the long run selling and bringing $30K is probably more than having a rental property be cash negative (at least that way you'd save money on taxes).

I find your question confusing and having the CPA analyze your situation, particularly if you are moving to another state, and perhaps changing your tax situation from a property owner to a renter (meaning when you move to your new city you'll be renting - which is exactly what happened to us), your personal tax situation is going to be affected.

Before we moved we talked with our CPA, ran through different scenarios, checked the numbers, but still, it was a "accidental investor" experience. In the long term, we kept the rental property for 18 years and made a lot of money when we finally sold it.

I would also talk with your new employer about relocation assistance. Most employers will want to know if they have a new employee that is going to be stressed out about finances, they might be willing to help you.
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Debra B Albe…, Agent, Port St Lucie, FL
Mon Apr 12, 2010
I feel that you should run the numbers on a rental situation. The market could be improved by next year and then you could take another look. Rentals can be managed by a property manager or self managed by you. If I were you, I would look at this possibility first.

Debra Albert, PA
Coldwell Banker Residential
0 votes
Emelia Sanch…, , Ontario, CA
Mon Apr 12, 2010
Hello Ohio-bound,

You may be able to do a short sale in Fl and buy in OH, as long as you haven't missed any payments. You will qualify for a short sale because of relocation and you may be able to buy right away because of extenuating circumstances (relocation).

Good Luck!
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Marita Topmi…, Agent, Indianapolis, IN
Sun Apr 11, 2010

Is there a deficiency clause in your mortgage contract that will force you to
make up any difference between sale price and what you owe?

I like option #3. Buy while you know your credit is good. If the St Augustine
market doesn't rebound in time, and/or the renter does not stay up to date on his payments and you are then forced to short sale or get foreclosed on, at least you will be in your new home before being forced to take a big credit hit. Also, we are all hearing constantly that interest rates will be going up - when? Don't know, but you can buy now while they are still low.

PS: I just saw a housing data analysis by Fiserv Inc. that estimates Florida housing market recovery in
10 years!

My two cents.

Good Luck,

Assoc Broker
Indianapolis area
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