Should I Rent or Short Sale?
I lost my job back in October and am now three months behind on mortgage. I decided to take the money out of my retirement, which I will be receiving soon and told the bank I will catch up as soon as I get the lump sum. I owe the bank about 2800, and my retirement sum will only be about 4,000. Also, I have found someone who is interested in renting my house as of Feb. 1 (the bank has approved me getting a renter since they have my promise in writing to make my payments current by then, and she's already given me a security deposit). HOWEVER... *My credit is already low (500) *I will be working overseas teaching in South Korea for at least a year (will stay longer if I like it) *I really do like my house a lot, it's fairly new and would love to pick up where I left off in a year, provided I can find a job here. *If my house does short sale, I may still owe the bank the difference and have to pay that off in a note *If my house does not short sale, it may still go into foreclosure, which will stay on my record for seven years *The 3,000 I'm paying to "catch up" could just be another 3k in my pocket, right? I'm 28, single, female, and on one hand the idea of getting rid of my house is liberating, but in another way I feel like it's my obligation to "manage it" by renting it out for the next few years until market bounces back. I also like the house/city a lot and would like to stay in it if I found another job here, however, the economy obviously isn't that great. I'm renting for 1100 per month. and my mortgage is only 850 a month. I decided against property manager, so i gave tenant a list of handymen I know who know I'm good for sending them payment. It's a also a brand new house, so not too much should go wrong. Also, she is Section 8 which means I'll be getting a guaranteed check from Housing Authority first of every month. I did run her credit/refs and she has a higher credit score than I do and stable rental/work history, no criminal background whatsoever. Single mom with two kids, nice lady and like I said her credit score is higher than mine, she's been renting same house in Ohio for three years and no issues. I missed mortgage nov, dec, and Jan. About the retirement - it's 20 percent taxes, not 50 percent, I already know the full amount after all deductions is around 4,000 (it's 7,000 before penalties). I think I'm going to try for the renter and if it doesn't work, I have a good realtor friend who specializes in short sales and c There is also a possibility I will stay here if I can find employment, even if it's part time. The house is 3 bedroom and 2000 square feet, so I figured I could get two roommates maybe and charge them like 400 each?
Renting & Real Estate - 3 Answers
Random Answers, Critics, Comments, Opinions :
1 :
A short sale or foreclosure on your credit report looks exactly the same. Pay off the back payments, because you will owe that money regardless. You will owe the difference, plus fees for what your home doesn't recoup when they sell it. If yuo can get a renter, make sure they are paying a minimum of 125% of the mortgage, or more. If the market doesn't demand that for your home, then sell and sell quickly!
2 :
If I'm reading this correctly, you're behind by about $2800, but you will still have mortgage to pay besides that. If you only have $2800 remaining on your mortgage this would be a no-brainer, so I have to assume that the $2800 only gets you caught up. Without a LOT more information, no one should advise you on a specific course of action. For example, how did you qualify your renter? Have you checked ALL previous rental references? And verified those references? Have you run her credit report? Look, I'm the first one to say that investment in real estate is the way to go. But, if you've never been a landlord before, you shouldn't go into this without a property manager that you trust. Especially, if you will be overseas! I strongly suggest you consult with a licensed property manager before you make any decision. Good luck!
3 :
Take the renter (assuming you won't be bleeding negative cash flow like crazy). I wish you hadn't taken the money from your retirement. If it's a retirement account (like 401k or IRA) you are going to get hit hard with penalties from the IRS (around 50% of everything you had in the account) regardless of your income bracket! Would be good if you could stop the disbursement. By the way, the bank is not your friend. The banks are in self-preservation mode and that means gobbling up every penny they can get any way they can get it. Also, if you will be out of the country while renting, you'll need a reliable person to look after your place. Hopefully, you can count on family members. Otherwise, you'll need a professional property manager. That'll cost about 10% of the monthly rent every month.
