Advice needed on what to do with mortgage

[Leesa926]

Sorry this is so long.... Appreciate any help!

I just got my Chapter 7 discharge about 10 days ago. I am in Florida. The plan was to continue to pay the mortgage and pay to stay which has not been an issue. Fast forward earlier this month and I was offered a job promotion in the same state but 2.5 hours away. It is too good to pass up so it looks like we are moving!

Current mortgage has a good interest rate (only 2.5%) and it is under $1000. We bought in 2007 when the market went bad so currently we owe a little less than what zillow lists the value of it (I don't expect to get anything if I can sell it - no equity). We would like to rent it out but are in the process of checking the roof to see if it needs to be replaced and if covered by insurance (don't plan on putting that into it to rent it out).

I have been current except for this month.... I need the money for deposit and rent for new apartment. If I need to I will catch up before it goes to 60 days. My lawyer says we can just walk away if we want to but I keep reading about other options.

I have been lucky that my scores actually jumped over 700 after bankruptcy (my issue was high utilization not lates, etc)

Should I call the bank to see if any options? I read about short sales, Deed in lieu, etc. or will that not do anything for me? I know it can take a while for them to foreclose from what I hear but I don't know how long.

Right now I just need time and not sure I have any. I need to start paying rent in my new place by next month. (job was paying a few weeks)... Currently I am back and forth on weekends.

Any advice is appreciated. Just not sure how to handle or if there is a better way since it is not too far underwater.

Thanks!

[justbroke]

Should I call the bank to see if any options? I read about short sales, Deed in lieu, etc. or will that not do anything for me? I know it can take a while for them to foreclose from what I hear but I don't know how long.

I would try to lease the home unless the cost to get it into rent-ready condition is prohibitive!

A short sale does nothing for you personally. A deed-in-lieu may be the way to go if there is only one lien on the property and you just want to get it out of your name. As your attorney already told you, there is nothing to do except walk away. You do have to consider any liability issues and if you're in a homeowner's association, the fees and assessments for which you would still be personally liable.

Personally, I'd keep it if I could get someone in that property REAL quick. Make sure the rent payment includes property taxes, HOA fees/dues, and any other costs (maintenance, roof repairs, etc).

I have been a landlord so it comes naturally to me. You may find it a pain in the neck to deal with a rental, but at least you're only 120 miles or so away.

[Leesa926]

Thanks! That would be the plan to rent it out. All depends on if the roof is covered... We have some small little issues but hubby was a contractor and can handle most of it. Our mortgage is only $987 so thinking of renting for $1100 or so to cover a property management company so I don't have to deal with it as much maybe.

We do not have an HOA so that is a plus.

I missed March mortgage. My understanding is they shouldn't start foreclosure until 60 days (hope that is right). My new pay will kick in next month and I can catch up. If I need to pay a few months (like 2-3) I could but better to get someone in quick. For that rent shouldn't be an issue I wouldn't think.

It does need some work though so I have to weigh the costs....

[justbroke]

The costs and the headaches. You may even want to consider lease options as well. I generally like the renting because you could have someone else paydown the mortgage and gain equity after 5-10 years. I have worked with property management companies to lease/manage my rentals but I have also had bad experience with them. I would work with them to determine what the market commands for that type of single-family home and be sure that you have no negative cash flow. You'll likely want a debt service ration of 1.2:1 (1.2 times the actual costs to own/maintain).

[bcohen]

What you can charge in rent for a particular dwelling unit is based on what the market will bear--not on your costs of owning the home! If the house is in good condition, and located in a neighborhood where people routinely pay $1100 per month in rent for a similar size home, then you can charge that much. If it's not, then you can't. It's really that simple. If comparable houses rent for $900 per month, then it doesn't matter if someone bought at the top of the market and has a $1500 monthly mortgage payment; the market today won't support renting it out for that much.

As a side note, even if you have to rent the house for less than your monthly costs of ownership, you aren't really "losing" money, because the mortgage is being paid down, and eventually, you will own it!

[Leesa926]

Thanks! The $1100 would be a good deal in my area. Most go for more. If I have to rent for less I would as well. Just wanted to point out market rent should cover my costs.