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Money Matters
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Old 08-16-2013, 03:26 PM   #1
joeski3d
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Little condo issue....

My wife and I have a condo that is currently considered “upside down” in the real estate industry. If we sell this upcoming fall, we will most likely still owe the bank 20K-30K due to market value of recent sales in the building. Chase bank tells us that they “do not have a procedure” to convert a mortgage into a private loan to pay off the balance of the debt we will have if we sell at market value. We were told that “people” go into short sale or get a home equity loan…end of story.

We do not qualify for HARP, because this condo is not our primary residency... and we have a tenant residing there. This property is considered additional income (even though the rent we can get is not enough to cover the monthly mortgage and condo fees).

We're a bit stuck here. Does anyone have a work-around idea?
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Old 08-16-2013, 05:15 PM   #2
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Short sale or paying the difference is your only option as far as I know.
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Old 08-17-2013, 03:53 PM   #3
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Not terribly interested in a short sale. We are looking into options for paying off the difference. Chase Bank (mortgage loaner) is not interested in exploring options.
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Old 08-17-2013, 04:26 PM   #4
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My wife and I have a condo that is currently considered “upside down” in the real estate industry. If we sell this upcoming fall, we will most likely still owe the bank 20K-30K due to market value of recent sales in the building. Chase bank tells us that they “do not have a procedure” to convert a mortgage into a private loan to pay off the balance of the debt we will have if we sell at market value. We were told that “people” go into short sale or get a home equity loan…end of story.

We do not qualify for HARP, because this condo is not our primary residency... and we have a tenant residing there. This property is considered additional income (even though the rent we can get is not enough to cover the monthly mortgage and condo fees).

We're a bit stuck here. Does anyone have a work-around idea?
So you want to sell for sure correct? And you're willing to bring the 20-30k to closing to pay off the bank, but were to get the money is what you're asking, right?
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Old 08-17-2013, 08:22 PM   #5
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More or less just looking for solutions that will be a smaller monthly hit on our resources. We're certainly going to have to take out a loan to make the difference. It's just neither of us have done this and we are looking for the smartest way to unload the condo.
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Old 08-18-2013, 11:36 AM   #6
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More or less just looking for solutions that will be a smaller monthly hit on our resources. We're certainly going to have to take out a loan to make the difference. It's just neither of us have done this and we are looking for the smartest way to unload the condo.
How much equity do you have in your primary residence? Have you refinanced in the last year or two to get a competitive interest rate?

Do you have any other unrestricted assets like stocks or bonds that are not in a 401k or Roth IRA?
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Old 08-18-2013, 02:44 PM   #7
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Equity? Not interested in a home equity loan. We've only been here a year anyway. Our primary residence is >4%. Can't refinance our condo as it's an income property... even though we are losing $$$ every month.

No other assets that are not 401/Roth related.
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Old 08-18-2013, 03:27 PM   #8
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Worst case, take the hit on your 401k.

It frees up a lot of cash flow and monthly headaches.
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Old 08-18-2013, 04:20 PM   #9
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Re: Little condo issue....

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Worst case, take the hit on your 401k.

It frees up a lot of cash flow and monthly headaches.
Yeah but doing that also results in penalties, taxes, losing out on investment money if you borrow against it, and having an automatic call on the loan if something happens to your job. Don't ever touch your 401k unless it's to avoid bankruptcy or foreclosure.

Idk Joe, we're going through something similar. Ours is currently listed for sale but we've been busting our arses so we'll have money to bring to closing. Luckily our mortgage is through a local lender so they're pretty easy to work with. Sucks your lender is being so difficult. Best of luck with your situation.

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Old 08-19-2013, 11:59 AM   #10
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I think your only choices are either to initiate a short sale, which will hurt your credit, get a private loan, or to just ride it out and keep it rented....
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Old 08-19-2013, 07:32 PM   #11
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I think your only choices are either to initiate a short sale, which will hurt your credit, get a private loan, or to just ride it out and keep it rented....
That's what it's looking like. We were just hoping for a mostly painless Hail Mary pass that would solve the obvious problems. Still open to hear a "This is what we did and it worked out better than planned" kind of story.
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Old 08-20-2013, 12:34 AM   #12
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Man I feel your pain, I changed companies and my rental went vacant!! Put it up for sale and got an offer in a few months, but a vacant property was a retirement killer for me. Good Luck!!
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Old 08-20-2013, 09:51 AM   #13
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I would look at it this way: Calculate your total monthly loss, say you are negative $300/mo. Figure out how long you could hold onto the place without taking the same hit as selling now.

For example, if you think you will owe 20k-30k, you can hold the property for 66-100 months and endure the same loss. Hopefully in those 6.5-8 years something will change, the value will go up, you will be able to charge more rent, etc. Meanwhile during that time your principal is dropping and you are building equity.

Basically I see no reason to sell right now, especially if you are looking to finance your exit strategy. It's more likely that your loan payment will be more than your monthly loss if my numbers are even remotely close.
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Old 08-20-2013, 08:08 PM   #14
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Basically I see no reason to sell right now, especially if you are looking to finance your exit strategy. It's more likely that your loan payment will be more than your monthly loss if my numbers are even remotely close.
Not so sure. Monthly loss is <$600 due to condo fees and the fact that we can't rent competitively if we were to cover the monthly mortgage bill. As I mentioned before, we can't refinance because it's an income property. My wife was terrified that, should we put the place on the market, she would up and leave... but that got me thinking that if she were to leave we could then refinance (she bought the place at the height of the housing bubble so the interest is something asinine)... but I'm not sure how long the place has to be unrented before it's no longer considered an income property. Does anyone have a scoop on that detail?
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Old 08-21-2013, 05:25 PM   #15
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HARP refinance.
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Old 08-23-2013, 11:09 AM   #16
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Old 08-23-2013, 01:07 PM   #17
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Is it in both your names? If loan is in only one name you can take the short sale hit and still be ok. Otherwise you just need to sit down with a financial adviser and look at the costs subsidizing the payment while renting it or getting a personal loan... Sucks. We did the short sale route as the other home was my primary for 3 years and could not claim the write off as income. one person will take the 150 point credit hit for 2 years. Each situation is different.

I think you have to have occupied it for 2 of the last 5 years as a primary residence..

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Old 08-23-2013, 01:57 PM   #18
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It is a crappy answer, but you could mail them the keys if you don't have much equity and are willing to lose it. That would kill your credit for several years, but if the equity is substantially less than the amount you'd owe in the event of a sale, you could go that route.

I think I'd have a tough time using this option unless the condo was preventing me from putting food on my table, etc.

Hey, you were looking for options, right?
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