keeping the house?

[blueberrykin]

Is it worth it? House is in foreclosure and ex husband wants it to be foreclosed on. He wants to be off of the mortgage ASAP. He feels he has an out with Chap 7 if mortgage company comes after us. I don't qualify for 7 but qualify for 13. Met with one lawyer that says I have a lot of disposable income if house is foreclosed on. I make $100k a year. House is worth $325 or so but owe $444k on first and $55k on second. Second is in my name only. I also have a $28k personal loan that I am making payments on.

[DeadManCrawling]

Welcome to the forum!

Not worth keeping, with that amount of lost equity.

By the time the equity recovers, if it ever does, you could be years out from BK and STILL have bought a nicer place for less money. My opinion is the real estate market is in for a decades long recovery, and that it will never be viewed again as an "investment". Most folks will consider it housing only, and act accordingly when buying. I see huge swaths of McMansions that will never catch up. At least not until they are driven up by decades worth of inflation.

Who would want a 5k square foot place with 500/month in HOA fees and 5 grand a year in taxes these days? Not me. Perhaps there are people who feel different. But everyone I know who has homes like that is trying to get away from them.

Only you know for sure, of course, and best luck in your decision.

[LimpDisc]

"Is it worth it"

I would let it go. It would take a long time to recover that much negative equity.

[walkthaplank]

"Is it worth it?"

In my unlearned opinion, you should include ALL of the expenses when considering giving up a home, not just what the house is worth today versus what you owe on it today. You put your life, love, sweat and tears into a home, not just cash. Your home also helps to pay for itself with those tax deductions that you would lose if you were to start renting again.

I would start with the fact that it is seriously underwater even if you were to strip the 2nd. That is a hefty hurdle to overcome, however, what are your long term intentions?

Do you plan on staying in the area long term (next 10-15 years)?

If you are planning on staying in the area long term, how much would it cost to rent something similar?

Are you willing to move on short notice if your rental home is foreclosed because the owner doesn't want to ride it out?

What is the condition of the house?

How expensive is it to stay in your home?

Will you be making expensive repairs in the near future?

Are your property taxes high?

Can you afford to pay your first mortgage and other home ownership expenses?

How much have you invested in your home so far?

How much longer do you need to pay on your first?

How secure is your job? How difficult is it to find new employment in your field? Are you looking at pay cuts in the next few years? What will it cost to move?

If you aren't planning on staying in the area, can't afford your basic home ownership expenses and first mortgage, or you are likely to lose your job and have to relocate in the near future, cut your losses, spare some pain and let it go.

If you plan on staying long term and job is reasonably secure, compare your mortgage payment 1st only along with home ownership expenses (taxes, insurance, HOA, maintenance, etc) to rentals where you would be willing to live in your area. Figure moving expenses into the equation, when you are renting you are at the mercy of the property owner, I would also figure in saving for additional moving expenses down the line and an expectation of annual rent increases. What changes will you see in your tax liabilities letting the house go? You are writing off a large chunk of that monthly mortgage payment.

Renting has the advantage of eliminating home ownership expenses and the ability to move out on short notice, home ownership gives you reasonable expectation of what it will cost you to live in your home and protects you from the whims of the property owner. Home ownership also has a finish line where the cost of living in your home drops to just home ownership expenses, whereas rent will always be due. Home ownership also allows you to write off many of the those expenses on your taxes. Likely all of your mortgage interest is written off on your income taxes. Property taxes are written off of your income taxes.

Even if you let this home go and bought a new home in 5 years for 30% less than you owe on your current mortgage, you should probably factor in your rental costs and any moving expenses over that five years, it may balance out with just staying in your home. It may save you money in the long term.

Look at the big picture and truly decide if it is worth while to stay in your home or if you would be better off in the long term to let it go.

[blueberrykin]

Thanks everyone for the responses especially walkthaplank. You have brought up a lot of good points.
In order to keep the house I really need to either rent it out or find a roommate. My job is pretty secure - I am a federal employee and plan to remain at my agency until I retire - so no plans to move. I am currently living with my boyfriend and he owns his home. He charges me minimal rent. The house was put up for rent at $2000 a month but apparently that was too low as my agent had people lining up to sign a lease immediately. We think $2200 or $2300 a month possible higher is more the market value. The property taxes are $5000 a year and included in my payment. The house is in good condition and was built in 2000. The interest expense is a large writeoff for me. My ex and I did several upgrades in the house in the five years we lived there.

My biggest concern is that my ex husband will declare bankruptcy and the house debt will fall all on me. My lawyer said this is quite possible. Another big concern is that the mortgage company will come after me for the deficiency if the house is foreclosed on. In either case, I would most likely have to file chapter 13 and my $1800+ a month disposable income for 5yrs would go to pay toward a house I no longer own.

The flip side is that I have no way to get my ex husband off the mortgage or deed right now. So it might be a few years until I can do that.