Wife and I disagree - Your advice requested

[PdxDavid]

I wanted to thank all that have posted replies. It really helps to look at this from all sides.

[LuciluS]

I wanted to thank all that have posted replies. It really helps to look at this from all sides.

You are very welcome and will be here if you have any further questions. It's a tough decision to make and only you and your dear wife can make it.

Keep us posted and Much Luck!

Luci

[justplaintired]

You should be fine with the modifaction, then the BK. Just make sure you are current going into the BK. Stay current while in the BK. Don't do the reaffirmation if you have doubts in staying in the house. And down the road, if something changes and you can no longer stay in the house, you can walk. I have read other threads where people were doing exactly that, not walking away, but doing a BK after the modifaction. Actually this works out much better for you, you get a lower rate, lower payment, giving you a much better chance of affording your house. Seems this way you and your wife will be happy.

[justplaintired]

You should be fine with the modifaction, then the BK. Just make sure you are current going into the BK. Stay current while in the BK. Don't do the reaffirmation if you have doubts in staying in the house. And down the road, if something changes and you can no longer stay in the house, you can walk. I have read other threads where people were doing exactly that, not walking away, but doing a BK after the modifaction. Actually this works out much better for you, you get a lower rate, lower payment, giving you a much better chance of affording your house. Seems this way you and your wife will be happy.

Good luck!

[2Bshinyandnew]

I am trying to think of this as a business decision. We are not attached to this house as it was only a step to the house we want/need. Then the market tanked and here we are. There is no way this place is going to regain 40k+ in value over the next 2 years. I don't think these will regain this value in 5 years. They have built too many and are poorly built to begin with. You add the empty units that will be here soon and we are looking even worse. Plus as units empty the HOA dues will have to increase. One thing goes wrong and we are all screwed.

We have looked at renting. We can get a 5br 2800sq in a much better neighborhood for 1675. There are others that are less but this is ideal for us as a family of 7. We are in a 3br 1400 sq now.

I appreciate your feedback.

$1675 is a pretty large housing expense increase, compared to $182K @5% for 30 years, even with taxes, insurance, and HOA fees added in. Unless I am misunderstanding? I thought you were trying to decrease your monthly housing expenses due to inability to pay back credit card and secured debt?

A family of 7 is tight in 1400 sq. ft, true, but if you can't afford to pay your credit cards, how can you afford a $300 - $500/mth increase in housing costs?

I'm just askin'

What is the foreclosure timeline in your state? If you accept the mod, file BK and then stop paying, or even just file BK and then stop paying you may be able to stay in the house for 6 months, a year, even longer in some areas of the country. That would certainly give an an opportunity to put some $$$ away for a move

[HakunaMatata]

$1675 is a pretty large housing expense increase, compared to $182K @5% for 30 years, even with taxes, insurance, and HOA fees added in. Unless I am misunderstanding? I thought you were trying to decrease your monthly housing expenses due to inability to pay back credit card and secured debt?

A family of 7 is tight in 1400 sq. ft, true, but if you can't afford to pay your credit cards, how can you afford a $300 - $500/mth increase in housing costs?

I'm just askin'

What is the foreclosure timeline in your state? If you accept the mod, file BK and then stop paying, or even just file BK and then stop paying you may be able to stay in the house for 6 months, a year, even longer in some areas of the country. That would certainly give an an opportunity to put some $$$ away for a move

Excellent points! Plus, one must consider the utility costs of a property double in size.

I may be incorrect; although, I sense the OP's concerns are not exclusively tied to monthly housing costs. Depreciation, size, quality, and (lack of) personal attachment appear to be major concerns as well.

With a pending BK, credit card costs are eliminated from the bottom line potentially expanding housing funds.

Personally, I wouldn't reaffirm a loan on a property that lacks attachment and grossly fails to satisfy the needs of my family. Sure, we all need to make concessions and residing in less than ideal space/environment may be factors. In this scenario, loan commitment has become a choice. While not an easy decision as there are plenty of factors to consider, I'd likely either ride-through on a modified loan or save during foreclosure. In the meantime, I'd continue to search for rental properties that satisfy my financial criteria and needs of my family. Of course, my opinion stems from my "we're all proverbial renters until this housing crisis is rectified and we realize true values of properties" stance.

[PdxDavid]

$1675 is a pretty large housing expense increase, compared to $182K @5% for 30 years, even with taxes, insurance, and HOA fees added in. Unless I am misunderstanding? I thought you were trying to decrease your monthly housing expenses due to inability to pay back credit card and secured debt?

A family of 7 is tight in 1400 sq. ft, true, but if you can't afford to pay your credit cards, how can you afford a $300 - $500/mth increase in housing costs?

I'm just askin'

What is the foreclosure timeline in your state? If you accept the mod, file BK and then stop paying, or even just file BK and then stop paying you may be able to stay in the house for 6 months, a year, even longer in some areas of the country. That would certainly give an an opportunity to put some $$$ away for a move

I see your points on the amount of money renting this place would cost. the difference is that in the BK we will be freeing up over 2000/mo by giving up CCs and Autos. I will be checking with the home owner about what to expect as far as utility costs. I don't want to be paying $400/mo for heat/electric. I have a feeling it is not going to be much more than what we pay currently because of the way these places are built.

Foreclosure will take many months here in Oregon. After they decide that they are going to foreclose and sell they have to give 120 days notice. There is another property in our area that has been empty for over 2 years. Different bank but still...

Thanks for the input.

[PdxDavid]

Excellent points! Plus, one must consider the utility costs of a property double in size.

I may be incorrect; although, I sense the OP's concerns are not exclusively tied to monthly housing costs. Depreciation, size, quality, and (lack of) personal attachment appear to be major concerns as well.

With a pending BK, credit card costs are eliminated from the bottom line potentially expanding housing funds.

Personally, I wouldn't reaffirm a loan on a property that lacks attachment and grossly fails to satisfy the needs of my family. Sure, we all need to make concessions and residing in less than ideal space/environment may be factors. In this scenario, loan commitment has become a choice. While not an easy decision as there are plenty of factors to consider, I'd likely either ride-through on a modified loan or save during foreclosure. In the meantime, I'd continue to search for rental properties that satisfy my financial criteria and needs of my family. Of course, my opinion stems from my "we're all proverbial renters until this housing crisis is rectified and we realize true values of properties" stance.

It is like we are twins. This is exactly my thinking. I sure hope we are right. and there is no way that we will reaffirm even if we do take the mod. If that is a deal breaker for them it just makes my decision easier.