Did you purchase your condo during the height of the market?
Has your family or your lifestyle changed?
Do you feel that there are no options out there for you?
I am here to tell you that I deal with these situations almost on a weekly basis and you DO have options. When you feel totally stuck, it is hard to move forward and see the light at the end of the tunnel. One of the things that I enjoy most about what I do is to talk people through their options. Each scenario is different and thus each solution is unique to the circumstances.
Are you staying local?
How is your credit?
Do you have ANY equity in the condo?
Can you afford to carry both the condo and a new home?
Are you employed?
Do you have other assets…401K, Savings, parents, etc.?
What is your current interest rate on your mortgage?
What other debt do you have?
What are you long term financial goals?
Are you a Veteran?
As you can see, there are many, many combinations of goals vs. financial ability. I have counselled many couples and individuals recently on how to get unstuck and move forward.
The Scenario– This couple had a 2 bedroom condo which was “under water”. Since they had purchased it their family had grown from two to four. They had bought it for $250,000 and today’s value was $180,000.
Option One-RENT AND BUY: We could rent the condo. Rental prices have skyrocketed lately and even if the couple is “Under Water”, they can offset 75% of the rental income against the mortgage indebtedness when they apply for a new mortgage on their new home. They would pay down principal as fast as they could on the condo so that they will have a solid, passive income investment in the future. They could then qualify for carrying BOTH the condo and their next home. They could use a FDA or VA loan with NO money down. We could ask the Seller to pay closing costs. They could also tap into savings, use money from a 401K or go with a very low down option.
Option Two -SELL AND RENT: We could borrow money from the 401K or savings to bring money to the closing table to pay off the debt on the condo. They could then move into a rental and save money towards a down payment on a home.
Option Three- RENT AND RENT: If there are no sources of funds to move forward the couple could rent their small condo and then rent a larger place.
Option Four- SHORT SALE AND RENT: Since they could demonstrate a “hardship” (job loss, divorce, medical issues, death) they could qualify to do a short sale. We could sell the condo well below the mortgage amount. The bank would then “forgive” the difference. Remember that the difference is counted as income and therefore this is a taxable event. Of course it hurt their credit. With a family member as a guarantor on the rent we could find them a place to live as they reestablish credit and save money.
I could go on and on, as there are as many solutions as there are people who feel that they cannot get out from underneath their condo. My job, as a Real Estate COUNSELLOR, is to get people from where they are to where they want to be. Call me for a FREE consultation to help you to define your housing and lifestyle options. Linda McCaffrey 203 994-3666