should i keep a second home that is under water?

Asked by Hondo, 92344 Tue Jan 19, 2010

the home is now 100k under water. We have a 15 year loan on it & the bank (B of A) wont change it to a 30 year. the renter we have in it only covers 1/2 of the mortgage. I'd like to walk away from it but fear repercusions.

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Susan J Penn,…, Agent, Weston, FL
Tue Nov 5, 2013
Did you try to refinance? When was the last time you had a comparative market analysis? Have you checked recent rental pricing?
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Bo Goulet, b…, Agent, Spring Valley Lake, CA
Tue Nov 5, 2013

You may not be underwater any longer.

I'd be glad to prepare a comparable market analysis for you, and offer possible solutions.
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, ,
Thu Aug 15, 2013
I was just looking through old post and I noticed yours. If you were not able to refinance at the time of the post, I can certainly help you out now. You can call me at 408-352-5147 or email me at You can check us out at I will look at your situation and present you with some options.

Alex Greer
NMLS #1056079
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Dan Chase, Home Buyer, Texas City, TX
Tue Jan 19, 2010
What happened to sticking by a deal? You liked the house, you decided to buy it. You gave no reason to think that anything has changed except for your perception of that house. i would keep it. Not all investments pay off quickly.
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Keith Sorem, Agent, Glendale, CA
Tue Jan 19, 2010
I'd like to walk away from it....

I would make a few observations:
1. You wouldn't be making this statement if the property had appreciated in value you probably wouldn't be walking away, right?
2. We had a similar situation, we ran negative for about four years. The plus was we were able to net the loss of the investment property to our tax bill and came out about even after taking taxes into account.
3. When we finally sold that property it had more than tripled in value over 18 years.

If you want to walk away, the lender will foreclose, you won't be able to buy another home for five years. If you opt to try to short sell, you'll need to prove hardship. Can you?

Then you are prevented in buying a home for two years.

You might consider talking with a Realtor about your options. Simply based on your post I think that you should stick it out.
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Michelle Mor…, Agent, Lake Havasu City, AZ
Tue Jan 19, 2010
The question is can you afford to pay the half that the renter doesn't cover. When you do a "Short Sale" you have to show a hardship and if it's because you just don't want to pay the negative anymore but can afford it, that isn't a hardship. You probably have been paying this payment all along and until you found out it's "Underwater" you changed your views on weather you want to keep this or not. If it wasn't "underwater" would you be wanting to get rid of it? In the 90's this same thing happened and people held on to their homes and things did turn around. I have the same situation but I'm $200K underwater. I know that someday it will turn around at least to a point that I may be able to sell it. If you payment is the same and you are still making the same money with your job, then nothing has changed financially for you. I feel that this is why we're in this mess. People have the attitude of "I can just walk away" What happened to integrity? You choose to buy, then stick it out if your financial situation is the same. Sorry that's my opinion on this matter.
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James P. (Ji…, Agent, South Padre Island, TX
Tue Jan 19, 2010
I always look at it from an IRS view! Can I rent/lease and then come out with a net positive after all my deductions? I currently am in the same situation and after some discussion with my accountant, the property is now available for lease. I may have the advantage as I did claim it as my primary residence for over three years so if I sell in the next two the proceeds should be tax free, that is if nothing changes in our current tax code!
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Ron Rovtar, Agent, Boulder, CO
Tue Jan 19, 2010
There are a lot of questions here that could change your best course of action. For example, if you purchased the second home as an investment, knowing that you would subsidize the loan payments in order to gain equity, then you might want to hang onto the property because the current drop in prices may have little impact on your long-term prospects for making money. Much as one who buys a company's stock can lose money the first week, only to gain much more over the next year, your second home may lose money in the short run, only to gain that much and more back in the longer run. If the long run prospects still look good to you, then you might want to ignore the current situation.

On the other hand, if you are like some people I know who moved to a new home and had to rent the old residence because of the recent drop in home prices, then you may want to take the more expedient route of checking into a short sale. In this case, the sooner you get the ball rolling, the sooner you will sell the house and get out from under the financial burden. Also, your credit score will bounce back sooner.

Ron Rovtar
Boulder, CO
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Larry Echava…, Agent, San Diego, CA
Tue Jan 19, 2010
Well the first question is, can you afford to keep paying the other 1/2 that your renters dont cover on the mortgage. if you cant afford the protion you pay every month you may want to consider Short Selling, because if you do walk away and let it go to foreclosure this will have a much larger impact on your credit. If every month your left in the Negative the wisest decision is to dump the bad Asset that is causing you to lose, but of course comes the delima of trying to sell in todays market, and that's where we come in, My Company provides free Consulting on these particular matters.

If you would like to discuss and receive a free consultation we would be Happy to sit down and discuss your options.

Thank you

Larry Echavarria
Tele 2 Enterprises Inc.
Wk. 760-686-3049
Fax 760-957-7198
0 votes
John Villaes…, , California
Tue Jan 19, 2010
Its a personal decision that you would have to come to. You can also do a short sale, it will negatively impact your credit but not as severe as a foreclosure. Here is some more information about short sales and how they work.…

John & Sarena Villaescusa
Keller Williams Realty
Cell: 562-818-2671
Web Reference:
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