should I go into debt to keep my current house until things turn around, or sell it for a loss, and get something cheaper where I can save money?

Asked by Sam, Sandy Hook, CT Fri May 13, 2011

We would lose almost all our down payment (about 70,000.) but would look to buy something with a legal rental so that our mortgage would go from 2500. to 900. a month with taxes and ins. We would also save 10,000. a year on child care for the next 3 years because we would be moving into a different district where child care was included as part of the public school. As it is we are incurring about 500. in debt each month to get by w/ no frills, no new cars, no cable tv, no phone, no eating out, no shopping, no after school activities for the kids, etc. We both work full time and make decent $ but we have about 100,000. in debt from school loans, property asessments, capital gains tax (from another property we sold (also for a loss) in 2007) and money spent taking care of elderly family members. If we sold and rented instead of bought we would lose the tax break that comes with owning. A rent of 1700 would be equal to about 2100, which is not enough savings. We are totally confused.

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Robert Morey, Agent, Newtown, CT
Fri May 13, 2011
BEST ANSWER
Hi Sam,

It sounds to me like your best bet would be to sell before the cost of servicing that debt gets burdensome enough to negatively impact your credit. While no one likes to take a hit the size you're contemplating, my first reaction is that to have a chance at eliminating that $100,000 in debt, and also enjoy your life, you need to reduce your housing and other expenses. Being able to reduce your mortgage and child care costs, while also getting rental income will go a long way toward getting you back on the path to stability and then, prosperity.

I agree with the other comments that you need to seek professional advice. I suggest a financial advisor, an accountant, an attorney, and, of course, a REALTOR. You need to have a full understanding of the implications of the course of action you ultimately choose, and the best way to become fully informed would be to consult these professionals. Please contact me at robertmorey@remax.net if I can be of assistance to you and your family.
0 votes
Ana Mattei, Agent, White Plains, NY
Tue May 17, 2011
I already answered you on May 14. I live in CT knowing very well your area Sandy Hook, Newtown, nevertheless feel free to contac me 203-012-6273 for an extra question.
0 votes
Eli Givoni-S…, , Boca Raton, FL
Mon May 16, 2011
Sell it for a loss and get something less expensive, where you can save money.
0 votes
Ana Mattei, Agent, White Plains, NY
Sat May 14, 2011
Dear Mr. Sam,

I will like to help you about your actual financial problem, that part is better to consult a bank profesional in mortgage, refinancial and much more, always there is a solution, nothing it is impossible, by myself, as Realtor, I am sure to find a house, i.e., either to rent or buy one with an extra apartment to rent, helping you with the mortgage payment.
You must focus the following: if you sell your property, you need to consider the marketing in your are and promote your Listing out of Sandy Hook, CT, i.e., Westchester County, contact Relocation Agents, as Licenseed in NY & CT., member Ridgefield Board, Westchert, MLS Fairfield, Greenwich and Westcheter Putnam, in my personal experience I found buyers out of the town where is listed the property.
Have faith, it is important, you will find a solution and have you another question?, feel free to contact me at 203-912-6273.

Ana Matteir, Realtor/CBR.
Keller Williams NY Realty
0 votes
Chris Senn, Agent, Enterprise, AL
Fri May 13, 2011
I agree with most. Go sit down with a professional lender, preferably one you have a relationship with, and run the numbers. From the sounds of it on the surface it looks better to sell at the moment. BUT there are pros and cons both ways. It always pays to get advice, you started out here and that is good, but I would go the one step further and sit with a pro and let them access all of the points and offer their opinion as well. Wish you the best of luck.
0 votes
Martin Feinb…, Agent, Culver City, CA
Fri May 13, 2011
Hi Sam,

Those are very difficult questions to answer with out speaking to a professional as the other contributors have recommended that you do. Run the numbers and talk to an advisor. Sometimes it is better to cut your losses before problems get worse.
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Anna M Brocco, Agent, Williston Park, NY
Fri May 13, 2011
If your debts are preventing you from simple life enjoyments, it's time to reassess; consult with your tax professional and attorney, see exactly what options you may have that will benefit you most.
0 votes
Eddie Mulker…, Agent, Braintree, MA
Fri May 13, 2011
Hi Sam
If it is something that you feel like is the best move long term for your family then you should do it,It is hard to take the loss ,but the long term outcome is better.
0 votes
..., , Lexington, MA
Fri May 13, 2011
It sounds like if you rent elsewhere for $900 per month and get the equivalent of $2100 per month for rent then your new apartment ($900) plus the loss on your house ($400) is much less than the $2500 mortgage payment.

As Patty said, go over the numbers for different scenarios with a good financial advisor.

Tom
0 votes
Patty McManus, Agent, Danbury, CT
Fri May 13, 2011
Hi Sam-
You have some major decisions to make! I think that you should speak with a financial advisor as soon as possible. I also think that the most important thing for you to do right now is research all of your options. As far as your real estate decision goes, I would be happy to meet with you to discuss your options in detail. Good luck!
Web Reference:  http://www.pattymcmanus.com
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