Possibly moving into our rental property - options?

[ssmdem]

I'm still torn on letting our rental property go, in addition to our own home. Our house is a lost cause if the modification can't get the payment down significantly, so not holding out alot of hope for that. Our plan is to let the rental go as well, as we're also upside down on that mortgage too, and the rent doesn't even cover the mortgage amount. However, I'm starting to reconsider and wondering about our options. I know we won't reaffirm the loan on the rental - want the option of walking away in the future left open. However, we're current with the mortgage right now and paying the additional that the incoming rent doesn't cover. We planned to stop paying this additional next month and just send them what we get for rent -- but now wondering if I shouldn't keep it current just as a safety net for us. In the event we aren't able to find a rental for ourselves when our house forecloses, at least it would be a roof over our heads even though it's not in the best location and a house that is really too small for us.

We have a first mortgage ($88K) and a HELOC ($80K) and the property is valued at about $135K. If we continue to pay and then move in down the road -- what happens if I pay JUST the mortgage and ignore the HELOC? Both loans are at the same bank. I know we can't strip the lien on the HELOC with the 1st mortgage giving us a substantial amount of equity -- but just wondering if they would offer a partial payment after discharge if we stop paying the HELOC and just only pay the 1st mortgage.

The combined payment of both loans is more than what we can rent a much bigger house for in a much more desirable location, so it seems foolish to even consider moving back here. But I am concerned about our pets. Most places consider pets, but we have a 65 pound lab, and some aren't as willing to accept the bigger dogs. She's ironically less of an issue than our little 5 pound dog, but I can understand people's reluctance.

Should I hang onto this property for now (keep the payment current) just as a safety net until we can secure another rental somewhere? And if we do move back into it, do I stand a chance of negotiating anything with the bank on that HELOC?

[justbroke]

It is quite possible that because the home is worth more than the first mortgage, the bank would foreclose the 2nd mortgage.

Reads as though you could use some good asset protection counseling and help you decide whether to keep paying the mortgage. I'm assuming the interest rate on the 2nd is outrageous (> 8%). Have you tried to refinance at some point?

I think your real problem is cash flow, and/or the lack thereof. In the long term, if you end up with neither home, you're going to need to have saved up money in order to move and cover deposits and other costs of moving. I wouldn't continue paying for things that I'm not going to keep. Depending on your State of residence (or where the homes are individually located) you could enjoy many months of free rent. (Okay, you're in Florida, so we're talking easily 9 months of free rent if you're current right now and stop paying June 1.)

However, you should make any decision to stop paying this or that, based on your short and long term plans. If you're going to file Bankruptcy, this could slow down the process even more.

[ssmdem]

Figured as much -- if we could get the outstanding balance down to what the house is worth, we'd keep it -- but I just don't see a way to do that. The interest rate on the HELOC is 5.75%, the 1st mortgage is 6.75%. I don't think anyone would talk to us about refinancing right now with our outstanding credit card balances and TWO upside down mortgages.

We are DEFINITELY filing for bankruptcy - that's a given - probably in October or November. We missed our first payment this month on the house we're in right now. No phone calls so far, but we're going to inquire about a modification after the 2nd or 3rd missed payment. The current mortgage payment is $2800, and we'd have to get it down to around $1500 to make this house affordable for us, and I'm just not holding out alot of hope for that. So, I've resigned myself to the fact that we're eventually losing this home. I DO want to drag it out as long as possible. A real estate attorney friend in this area has said to count on at least six months, possibly a year - without throwing other factors into it. Applying for the modification and the timing of the bankruptcy filing are hopefully going to add additional time for us. I want to stay here as long as possible precisely for what you mentioned - I want to save up as much as possible. We're currently stockpiling food and getting medical issues caught up on to use up the cash we do have, but hoping to file as soon as we can so I can actually start saving. As soon as our six month average hits where I need it to be, we're filing.

Both properties are in Florida, same area. The rental property is currently leased through the end of January. She's making her payments and we're paying the mortgage, but my attorney has said when we definitely make a decision on whether to keep the rental, to stop paying the additional amount that we add to it each month. This will cause the HELOC to go unpaid as they don't allow partial payments. The additional rent will either go to additional principal on the 1st mortgage or expenses on the property (the AC is going to go out any day now! Hoping it lasts this summer, but doubtful).

My biggest concern right now is just making absolutely sure we have somewhere to go when we are forced out of this house. It's not where we want to be, but it would at least be something, and then once we were able to find a rental elsewhere, then I would stop making the payments on the property and let them foreclose. I guess I'm just wondering if I should just "suck up" the extra $150 a month as a safety net to ensure we at least have a roof over our heads when the time comes.