Okay...what would you do in this case

[Okira]

We filed Chapter 7 and have our 341 on 9/9/10. We are upside-down on our mortgage by 50,000. My mom is moving out of her home which she owns and has offered us her home rent free. She is going to be living with her VERY wealthy cousin who will let her live there for free (not bad, huh?). The only stipulation is that after her cousin dies she will need to move out and get an apartment as she no longer wants to pay for the maintenance of her home. When she moves into an apartment we would begin paying her rent. To me, I see this as a wonderful opportunity to walk away from a home that I will never make any money from and just start over, but my husband doesn't see things the same way. He says he's worked hard all his life for this house and is really leary about letting it go. So...what would you do? Stay or go?

[ccsjoe]

That is a very personal question, one that only you two can answer. You need to make a decision that is both business-like and emotional. You obviously take the business approach while your husband takes the emotional/pride approach. Nobody can answer this but you two.

[cantbreathe]

Are you struggling to make your mortgage, Okira?

[Okira]

Are you struggling to make your mortgage, Okira?

Not really. We are past due on our property taxes by about 6,000, but we could pay that by the end of February. We also have some maintenance issues that would need addressing (5,000+).

[SMinGA]

I agree, no one we can answer for you.

I see potential problems when taking favors from family though. Sometimes they come with invisible strings attached, obligations you may not even be aware you're taking on.

I would say to keep this as 2 separate decisions. 1st decision: whether you are going to stay in your current house or not. Is your current mortgage affordable? Does the home need major repair? Is the area convenient to work, safe, etc.? Other things to consider - could you rent for less than what you're paying now for mortgage & home upkeep? Research rentals in areas you would consider moving to. Don't forget to consider the negative tax consequences - may have to adjust your tax withholding to take a little more out since you would no longer have home related deductions.

If ultimately you decide to give up your house - then consider your mother's offer as one option. Also must consider - is it a house that would be suitable for you, based on size, location, etc.? If you moved to this house - would you HAVE to stay indefinitey or could you move out at some point if you saved and found an ideal home of your own? Would that create bad blood between you & your mother?

[maddog2112]

It`s your choice of course, but if you truly need a fresh start it looks like it is staring straight at you. It seems like a great way to build up some savings and get out of the negative. Good luck.

[HakunaMatata]

Filing BK and willingly maintaining negative equity isn't a good combination, IMO. I understand many attach emotion to houses; however, a business mindset should prevail over sentiment. Mortgages involve money and contractual obligation...this is business. Your husband should be proud of his hard work and efforts. He successfully achieved his goal of homeownership. He didn't single-handedly create the housing market crisis. Sadly, he is enduring its harsh effects. Past successes should continue to carry pride while former thinking regarding the housing market should cease. His former homeownership goal was obtained. Unfortunately, negative equity has become a reality for countless homeowners and this wasn't part of the original investment goal.

You're currently in a proverbial renter position (underwater homeowner) and this will likely be long-term. You're being offered a rent-free position with less stringent timelines and greater possibilities (save money during the rent-free period, purchase a new home with realistic market value in the future, purchase your mother's home, permit your current home to go into foreclosure and buy it back for significantly less than the existing mortgage, etc.).

Should you stay or should you go? BK is offering you a lifejacket. Don't stay underwater.

[Okira]

Filing BK and willingly maintaining negative equity isn't a good combination, IMO. I understand many attach emotion to houses; however, a business mindset should prevail over sentiment. Mortgages involve money and contractual obligation...this is business. Your husband should be proud of his hard work and efforts. He successfully achieved his goal of homeownership. He didn't single-handedly create the housing market crisis. Sadly, he is enduring its harsh effects. Past successes should continue to carry pride while former thinking regarding the housing market should cease. His former homeownership goal was obtained. Unfortunately, negative equity has become a reality for countless homeowners and this wasn't part of the original investment goal.

You're currently in a proverbial renter position (underwater homeowner) and this will likely be long-term. You're being offered a rent-free position with less stringent timelines and greater possibilities (save money during the rent-free period, purchase a new home with realistic market value in the future, purchase your mother's home, permit your current home to go into foreclosure and buy it back for significantly less than the existing mortgage, etc.).

Should you stay or should you go? BK is offering you a lifejacket. Don't stay underwater.

I will show this to my reluctant husband and hope he sees things the way I do! Thank you for your wise words

[justfiveofus]

I agree. We had a house that we were 60K upside down in, plus the credit card debt we'd incurred trying to bring up the value. I cried off and on for quite awhile because I felt like we were giving up something that we had worked so hard for and that we had had failed. However, walking away was the best idea. I had to think with my head on this one. There will be another house at some point in the future. A house doesn't make some place a home so make your home wherever it makes sense for your family.

Plus, think of the money you could set aside if you were living rent free towards that dream house. Good luck!

[Okira]

I agree. We had a house that we were 60K upside down in, plus the credit card debt we'd incurred trying to bring up the value. I cried off and on for quite awhile because I felt like we were giving up something that we had worked so hard for and that we had had failed. However, walking away was the best idea. I had to think with my head on this one. There will be another house at some point in the future. A house doesn't make some place a home so make your home wherever it makes sense for your family.

Plus, think of the money you could set aside if you were living rent free towards that dream house. Good luck!

Agreed! The other thing I failed to mention is that eventually the home we would be moving to will be ours. In essense, I'm protecting my inheritance! Ugh...this is so hard, but I know this too shall pass.

[bigtim6656]

I see wanting to own your own home. Sucks to live in another persons house. Though like already said we all need a fresh start and a new place to live can do that.

I think and this is more with men it is hard to work for something and pay into it and walk away.

You both need to sit down list a pro and cons list. Is the neighborhood to your liking, how much do you owe, how much work does it need, property taxs.

In today's market you could walk away, live in your moms home for some time, MAKE IT YOUR HOME and one day find a better home for less then what you owe on your current home.

Remind your husband of all the money you would have after not paying the big mortgage

[Okira]

I see wanting to own your own home. Sucks to live in another persons house. Though like already said we all need a fresh start and a new place to live can do that.

I think and this is more with men it is hard to work for something and pay into it and walk away.

You both need to sit down list a pro and cons list. Is the neighborhood to your liking, how much do you owe, how much work does it need, property taxs.

In today's market you could walk away, live in your moms home for some time, MAKE IT YOUR HOME and one day find a better home for less then what you owe on your current home.

Remind your husband of all the money you would have after not paying the big mortgage

There are no cons. None. Her neighborhood is far better, the house is larger, nicer, and in perfect condition. The location is superb, and I already know all the neighbors! We just need to make a decision before we both go nuts.

[bigtim6656]

I think you miss understood me. I meant a pro and con list of keeping your house. Like a pro would be your there and would not have to move. The cons being her house is better prefect, and bigger. I think you just got it backwards to what I was thinking.
Though the grass is always greener on the other side. Sometimes it is and sometimes not so much. Though from the sound of it your wanting to make the right choice. My thing would be the lack of a payment you would not be making

There are no cons. None. Her neighborhood is far better, the house is larger, nicer, and in perfect condition. The location is superb, and I already know all the neighbors! We just need to make a decision before we both go nuts.

[Okira]

You're right...I misunderstood. I will do that right now. Maybe it will help us see things a bit clearer. Thanks

[HakunaMatata]

In days such as these, we all need to expand or redefine our notions of security, stability, and priority. Concessions and realistic projections have become mandatory for many of us. Many of us worked hard and our efforts became tangible. For many, real estate represented our hard work and success. A sense of pride and accomplishment were attached to our properties.

Our houses were formerly deemed "investments". Forget the past (albeit maintain the lessons). Hard work and accomplishment remain. Success and goal completion cannot be surrendered. Market value, however, has not remained; and, houses can be surrendered with pride. This shouldn't be regarded as failure or "giving up" unless, of course, one is referring to giving up a bad investment. Investing in a losing investment simply isn't a keen business strategy.