Keep home or let it go?

[123boxie]

Hello everyone, first off thank you for even taking the time to read my post.

We own two homes. Our 'old' home has less space, but more equity and since we never changed our address we are staying in this for the bankruptcy. The new home we own has no equity based upon the real estate market in our area. Nothing seems to be selling over 168,000 and our new home is supposed to be worth 250,000 to the bank when we financed. We now owe 178,00 on it so we were deciding if we should try and keep both homes and then rent one out?

The old home is only worth around 75k and we owe 53k.

The bigger new home mortgage is $1740/month + $300 utilities +200 insurance + 150/month property tax.

The old home is around $1,000 for all expenses per month.

We are self employed and it is either feast or famine. We have been delinquent so many times this year on everything and because of our huge credit card debt 200k are filing chapter 7 soon. However, it is killing me with this decision of whether to even try and salvage both homes.

My children love the new home because we basically rebuilt the entire home ourselves. We put everything into the home and it is very nice, but there are still things that need to be finished. I look at the small things that need to be finished and feel so horrible, but the thought of losing the home is kind of traumatic as well.

We live very close to the new home so we would have to drive by every day if we gave it up and I don't want to stress the kids out. We have 5 kids and one on the way due in August. I am stressed in either home because the new home only has three bedrooms upstairs and the old home only has three bedrooms as well. If I gave up the new home I could save money to build a bigger home with more bedrooms, but at the same time I would be giving up the home office for our work and a nice playroom for the gazillian toys we have.

I know this all seems petty so I am asking for unvarnished opinions. Remember I got myself in this mess by thinking that better days would always be ahead. I seem to have lost everything in the last few years. By the way we financed the new home in 2007 and that is when our credit card bills started increasing as well. Although I was always paying the house payment and having food on the table. Not sure if the credit cards went up because of the house or because of the exorbitant interest. Maybe both.

Point is I don't know whether turning the house in is the best choice or if I should get the bank to redo the loan over 30 years instead 15 years and then get the bigger house for the lower payment. Insurance and property taxes will stay the same.


thank you very much and I eagerly await any comments as I have been losing lots of sleep over this. Stupid huh?

Jen

[BobMango]

Strictly from a financial standpoint this is a no brainer. The old house is your best bet. I would recommend hanging on to it for three years, then sell it and buy a newer bigger nicer house if you want to. Saving the money that's been going to both the new house and the credit cards will give you a nice next egg to add to your equity in the old house.

Additionally, we are not through with the economic turmoil yet so you are definitely better staying on the low end of the real estate market until things settle out.

[momofthree]

If you gave up the new home could you be pushed into a chapter 13? That would be my only concern. If not, then I'd agree with the pp, get rid of the new, keep the old with the hope of upgrading in the next few years....

[dspii]

If you are filing C7, check your state exemptions, you may have enough to cover the equity in the small house. Bottom line, in these desperate times, we all have to make hard unpopular decisions. The best chance is to get the opinion of a couple lawyers to see what you can protect in bk. Chances are one house will go and you will likely hold on to the other.

[OhioFiler]

I would try to hang on to both houses through the bankruptcy then sell the smaller house and use the $25,000 profit to finish the newer home.

You will have a difficult time refinancing the 15 year mortgage to a 30 though.

[AngelinaCatHub]

If they are going C7, I doubt the Court will let them keep both houses. You only need one, either one, but two and then not pay the outstanding debt? The Courts are fair to both sides. The Trustee is not working for you, but the creditor. They are not out to damage you as our Trustee was very kind with all the screw ups we made. But, I still had to pay for my mistakes. The Judge is going to disallow one of those mortgages is my guess. 'Hub

[123boxie]

Thank you all for the comments, I truly appreciate them.

Having to convert to Chapter 13 never crossed my mind and my attorney never mentioned that could happen. He just simply stated make sure you write down which home we wish to keep.

I didn't mean to imply that the new home has 25k worth of repairs left. They are only minor things. Our drywaller screwed up and left some unsightly seams, a few other drywall issues around outlets. I never finished the last few stair treads as I wanted so they need to be redone and the rail is just hanging on the wall and where it opens up at the bottom of the stairs needs the baluster.

the yard really needs some tree trimming, a new fence since we are so close to the road. We have done so much to the house inside and the outside. I spent tons of money trucking dirt in to fix drainage problems. Spent countless summer hours digging trenches to put in a french drain around buried electrical lines and really spent a lot of time working the house. Then after all that I still notice the imperfections that really drive me crazy, because I wasn't able to control those during construction because I was pregnant then and 8 months pregnant you just start to give in and let other people have their way.

So now you fast forward a couple of years and I find myself yet again pregnant and in terrible situation.

As far as having to turn both homes in, our attorney stated if you are foolish enough to keep the new home with no equity the trustee will not care. He states listen to me and all will work out. He seems really confident and their firm is really slick.

We haven't filed because I'm waiting for some self employment income and I don't want to receive it after I file, but before the 341 hearing.

I had really started to shift gears not to keep the house until I read the post where the guy states to keep both houses and sell the old to keep the new. I have never been good at making decisions, low self esteem makes me double guess everything. I am afraid after it is all done I will look down the road and see the new house and puke because of what I lost. I also envision myself letting go and saving tons of money and building the home of my dreams not just remodeling an old home to make it beautiful again (which is what the new one is).

For all I know the new one could turn around in three years and be worth the 250k that is was when we refinanced in 2007, but somehow I don't think even that justifies the cost of keeping it.

Yes the new home is bigger, but it does have two stair ways taking away from the main floor, basement and stairs to upstairs. The basement is 100 years old so only good for storing few things and tornado shelter. So truly we only live upstairs in three bedrooms, two bathrooms and downstairs is a half bathroom, playroom (which cannot be converted to bedroom because you have to walk through it to get to office and laundry room), dining room, living room, and kitchen. It is very open so there aren't real dividing lines between rooms to make it into a formal bedroom. I suppose I could throw a dividing screen up to make a bedroom, but that is only temporary. Anyone the lack of bedrooms is what is killing me, we have 5 boys and they are really energetic balls of fire and they argue when confined. It is terrible, otherwise they are great kids and I'm very proud of them.

We do live in a small community and everyone will talk about this and know we lost the house. It feels humiliating but I swear it might be liberating. I will once again have hope that I could build a house with more bedrooms but utilizing more of the space, does this make sense.

It is just the thought of giving up that kills me. As it is bankruptcy was a long hard struggle for me despite the fact that I owe 200k I still had to go to 4 bankruptcy attorneys before I would even think about filing.

Please forgive my really long post, but please understand this actually soothes my soul to actually 'talk' this out. My husband just agrees he really doesn't care one way or the other so I feel if I make a mistake my children will hate me not him. Or I might hate myself.

Thank you for all the feedback it is greatly appreciated.

Jen

[keepmine]

. What the kids and other people think shouldn't even enter into the equation. Do what's in your financial best interest.
With a soon to be family of 8 and an uncertain income you sure don't want to hang onto a house that's underwater by nearly $100K. Bk is about a fresh start. Nothing fresh about dragging a financial albatross through bk and jeopardizing that fresh start.

[123boxie]

Keepmine, thank you for the candid post, but I think I either explained wrong or you are able to forecast numbers better than me, but the new house we owe 178k and the market no houses are selling for more than 163k in our area.

I think you are probably dead on though when you say it doesn't matter what anyone else thinks, but base it on numbers. So based upon those numbers just now do you still think the same thing. I mean our house used to be worth 250k, maybe it still will be, I don't have a crystal ball to foresee the future.

I also agree about the uncertain future. I am terribly scared which is why I don't really care about bankruptcy as much as I did before, but I don't want to make stupid chess moves, if you know what I mean. The fish that got away story, you know the kind that drives everyone crazy.

Thank you,

Jen

[OhioFiler]

Keepmine, thank you for the candid post, but I think I either explained wrong or you are able to forecast numbers better than me, but the new house we owe 178k and the market no houses are selling for more than 163k in our area.

I think you are probably dead on though when you say it doesn't matter what anyone else thinks, but base it on numbers. So based upon those numbers just now do you still think the same thing. I mean our house used to be worth 250k, maybe it still will be, I don't have a crystal ball to foresee the future.

I also agree about the uncertain future. I am terribly scared which is why I don't really care about bankruptcy as much as I did before, but I don't want to make stupid chess moves, if you know what I mean. The fish that got away story, you know the kind that drives everyone crazy.

Thank you,

Jen

Jen, you need MORE house not less given your family size. The amount you are upside down on the larger house is minimal. I really think you are better off keeping the larger house. If you must, sell the house you have equity in and use that money for other important expenditures before you file BK.

[HOMEBODY]

Hi, I am in the same situation as you..have a newer house that I live in and an older one that I rent out which has equity. I dont want to give them up. I had the older house for 20 years and borrowed money to buy the new one..so its all tied in.

I am planning on keeping both. I like my house now, its on 2 acres and very hard to find. My interest is only 1% although its underwater, I still like my house and I am able to pay a lot on the equity each month since its only 1% interest.

If I were you, I would keep both homes and rent one out. The market will pick up eventually and if you get renters there, the one house can pay itself.

Good luck with your decision. I know its very hard. We have worked so hard for what we have and because of the economy the way it is, we are in the situation we are in.