Need Help Quick!
Since we bought our home in a new development 4 years ago, several houses have been forclosed on due to several different resons. The bank has said that since our property has been reassesed, our taxes have increased and we owe them for paying the last three years of taxes from escrow. Our payment went from 1160.00 to 1750.00. I talked them into giveing us 3 years to pay it back so now it is 1550.00 per month. but even once it is paid up our payment will be around 1450.00 per month. We tried to refinance and the bank claims that due to all of the foreclosures in our neighborhood our house is worth less then what we paid and what we owe!
At this point we just want out. Some houses identical to ours were bought for 25,000 less then ours and we don't know why. The houses identical to ours are for sale for 35,000 less then what we need to sell our house for to even break even.
Now, a friend of ours is moving and is willing to do a land contract where we put 20,000 down on a house that is in a much nicer area and is 500 square feet bigger then ours. His house will only improve because it is an established neighborhood and ours is only going down hill.
If we save our money and use it for a downpayment for the landcontract instead of paying on our house can we be sued? I am willing just to give the bank our house back. Please reply because I just missed my first payment. BTW...I filed BK back in 2001 after a divorce so this bk is not an option. :-o
Tabitha,
First of all, I'm sorry to hear about your situation. That's just wrong what banks do sometimes.
Your back-out options: You will most definitely be sued if you stop paying. A judgement against you will not last 7-10 years like bk, it will last 7+7 = 14 years. A judgement is viewed as something MUCH worse on your credit history than a bk, since bk is more of a "second chance" thing. However, depending on how you filed, you may still have a chance. If you filed Chapter 7, Chapter 13 is still an option.
Now for the solutions. Assuming that since you posted on this forum, you've probably at least considered RE investing, I can see some grave mistakes in your thinking. Everyone gets into a pinch, and everyone makes mistakes, and everyone loses money in RE sometimes. It's not a 100% winning game. But it's what you do when problems happen that will determine if you can climb out of it.
I suggest, if you haven't done so already, you IMMEDIATELY read Robert Kiyosaki's "Rich Dad, Poor Dad" and "Cashflow Quadrant" (in that order). They're small, very easy-to-read books that you will enjoy, and they will give you the right perspective on things.
Then, you need to consider your annual income, family size, and all your needs, and you need to realize that YOUR OWN house is not an investment (as your life is clearly showing you right now), it's a liability. You need to reduce your own house to the absolute bare minimum. How much could you get a month if you were to rent this house out? Let's say it would rent for $1200 today (naturally its better if its more), then you need to go, and get a house in a different neighborhood or maybe even rent an appartment for, say, $650. $1550-1200+650=1000. Can you afford that per month?
When you say "WE", do you mean you and your kids? Or you and your b/f? or you and your new husband?
If it's you and your new husband, that may be even better, because you're given money not to exceed 55% of your gross income in debt. So if between you and him you only make $2820, then rent is your only option for the scenario above, but if you make in excess of $4640/month, then you could qualify for another mortgage of up to $1000 (if you make less, it'll be less). Think of it, not only will you successfully climb out of your scenario, but you'll keep both homes. New houses rarely "permanently" go down in value. Chances are, your neighborhood is just in an economic recession. 4-5 years from now, your house may double in value, and you'll be really glad that you kept it.
Another option, is to sell your house on a "leaso-option" or "rent-to-own" to someone that has really bad, or no credit. Tell them - $5000 down, and $1700/month moves you in! if they pay that off for 30 years, they keep the house, if they move out and stop paying - you get to keep the house, all the money, and re-sell it again. Plus you put some cash in your pocket every month and you won't be liable for expenses of repairs, like you would with rent.
As you can see, there are ALWAYS other options, just look around more.
God bless and good luck!
Wow, that is a ot of information. So what happens if the bank does sue me? What can they do to me or take from me?
Quote:
On 2004-11-21 00:46, LouInvestor wrote:
Tabitha,
First of all, I'm sorry to hear about your situation. That's just wrong what banks do sometimes.
Your back-out options: You will most definitely be sued if you stop paying. A judgement against you will not last 7-10 years like bk, it will last 7+7 = 14 years. A judgement is viewed as something MUCH worse on your credit history than a bk, since bk is more of a "second chance" thing. However, depending on how you filed, you may still have a chance. If you filed Chapter 7, Chapter 13 is still an option.
Now for the solutions. Assuming that since you posted on this forum, you've probably at least considered RE investing, I can see some grave mistakes in your thinking. Everyone gets into a pinch, and everyone makes mistakes, and everyone loses money in RE sometimes. It's not a 100% winning game. But it's what you do when problems happen that will determine if you can climb out of it.
I suggest, if you haven't done so already, you IMMEDIATELY read Robert Kiyosaki's "Rich Dad, Poor Dad" and "Cashflow Quadrant" (in that order). They're small, very easy-to-read books that you will enjoy, and they will give you the right perspective on things.
Then, you need to consider your annual income, family size, and all your needs, and you need to realize that YOUR OWN house is not an investment (as your life is clearly showing you right now), it's a liability. You need to reduce your own house to the absolute bare minimum. How much could you get a month if you were to rent this house out? Let's say it would rent for $1200 today (naturally its better if its more), then you need to go, and get a house in a different neighborhood or maybe even rent an appartment for, say, $650. $1550-1200+650=1000. Can you afford that per month?
When you say "WE", do you mean you and your kids? Or you and your b/f? or you and your new husband?
If it's you and your new husband, that may be even better, because you're given money not to exceed 55% of your gross income in debt. So if between you and him you only make $2820, then rent is your only option for the scenario above, but if you make in excess of $4640/month, then you could qualify for another mortgage of up to $1000 (if you make less, it'll be less). Think of it, not only will you successfully climb out of your scenario, but you'll keep both homes. New houses rarely "permanently" go down in value. Chances are, your neighborhood is just in an economic recession. 4-5 years from now, your house may double in value, and you'll be really glad that you kept it.
Another option, is to sell your house on a "leaso-option" or "rent-to-own" to someone that has really bad, or no credit. Tell them - $5000 down, and $1700/month moves you in! if they pay that off for 30 years, they keep the house, if they move out and stop paying - you get to keep the house, all the money, and re-sell it again. Plus you put some cash in your pocket every month and you won't be liable for expenses of repairs, like you would with rent.
As you can see, there are ALWAYS other options, just look around more.
God bless and good luck!
Quote:
On 2004-11-21 15:11, Tabitha3 wrote:
Wow, that is a ot of information. So what happens if the bank does sue me? What can they do to me or take from me?
You want to avoid a judgement at any cost possible. But your state's laws and your contract(loan paperwork) determine what a bank can get its hands on, just like in BK case. Check your contract, you might have signed that they can auction off all your personal property in case of a default. Consult a bankruptcy attorney, and then AVOID the lawsuit if you can.
Whatever it takes, do NOT let that bank take your house. I agree, you should consider doing a lease-option to someone with difficulty qualifying for a mortgage, and keep both houses. Ecomonic recessions occur in certain neighborhoods one year, and others the next, it will almost surely cure itself once the foreclosure rate drops.
Consider selling it on creative terms, look on the posts on this site to get some ideas of what you can do. You'll be so glad you fought to keep it out of foreclosure. Pay the mortgage payment, don't let that interfere with your credit rating.... because after a BK the scoring system us MUCH harded on you if you make another mistake. Save what you can, on a land contract you can negotiate 100% financing if you need to.
Best of luck to you.
you need to consult an atty. this to sensitive an issue for you to act on us back seat layers. years ago my spouse passed and the same thing with the escrow happened to me. they called and said they had made a mistake and that i had to send in $10,000 that week. long story short i got and attny......lost everything, started again........km