Wednesday, January 6, 2010

Personal Loan or Short Sale?

Well the time has come to put our house on the market. The Husband sat with a realtor today and talked about our options. We have two. Neither of them sunny. Our mortgage pay-off is currently $84500 the realtor stated he could move the house for $75000 (eek!) Which leaves a deficit of $9500 ( double eek!), and closing costs of about $6000 (triple eek!). So basically about $16000 remaining.

So here are options.

1. Find $16000 to cover it ... hmm, I'm pretty sure I don't have that kind of change under the sofa.

2. Ask for a short sale, and take a 7 year hit on our credit report.

I think we are going to choose option one. I honestly believe if you spend the money you pay it back, no easy way out.

I think we could probably save $4000 ourselves over the next 6 months (that's how long I think it will take to sell). Which would leave a personal loan of $12000. If we were lucky enough to be approved at 15% for 60 months this would our monthly payment about $300. This would mean us both taking on extra work (insert heavy sigh). But if it has to be done, it has to be done.

But wait! That's not all. We would need to save money also to move into a rental home and moving costs. I'm thinking that's $2000.

Is there any sunny side to this?

All I can think of at this time, is that by selling our house we decrease our debt-to-income-ratio, and closer to my desire of moving back to the UK one day (in the far far distant future). I'll take that for now.

So what would you do in our situation? I'd love any and all advice/opinions ... feel free to leave a comment below. And thanks for listening to my rambles --- again.


HS @ Our Debt Blog said...

OK I think you need to tell readers why you are selling? did your husband get a new job? do you want a new house? are you going to rent?

Have you checked with a different realtor? can you put it on the market for a few months at 85,000? Is there stuff you can do in a few months to increase the price like landscaping or painting?

Don't borrow 16,000 that's a lot of money, you are just going to get deeper in to debt!


Mom 'n' More said...

Hey HS,

Thanks for your comment. We will be selling our house for several reasons:

1. It costs us in loans per year $3-5K on repairs and upkeep.

2. We wish our daughter to be in my Husband's school district which no longer accepts teachers children if they are out of district.

3. Our long term goal is to move back to the UK. Getting rid of the mortage/house will make this move quicker when the time is right.

Even though we would be adding $16000 to our debt and $300 to monthly payments, we would be increasing our overall debt by $74000, at the sale of the house.

We live in a very old subdivision, our houses are not the sought after kind. Last year I watched Banked Own signs appear on doors. It was sad. It has driven down prices in the subdivision dramatically.

Plus right next to us are new builds and you can get the same sized house as ours, for $85K.


Mom 'n' More said...

soory I meant decreasing by 75000

Rock, Paper, Scissors said...

I am not in your position so I don't have the POV you have, but I definitely think there is/will be a way for you to come up with the whole $16000.

I admire you immensely for being so open on your blog.

I am sure if you stick with Dave and his ideas it is all going to come together for you.

You know I like details. I feel like I don't even know you :O) whats with the UK? I wouldn't mind a small bio, but detailed, about you.


Andrea said...

I had no idea you were considering moving back to the UK. I'm curious too... why?

Miss chatin' with you,

Mrs. Money said...

Oh man! That sucks :( I hope things work out for you!

Anonymous said...

i just found your blog via katy couponer.
you might find a better deal at credit unions; 15% for 60 months is pretty high.

Anonymous said...

Hi You have other options.
1) For Sale by owner--very simple to do--you can even list on the MLS I cuurently have a house for sale with and I sold my aunts house just by putting out a sign and having an open house--realitors said 75 I sold for cash at 100 and have bought many rentals over the years--I own a daycare my side job is rentals--with for sale by owner--basically you sign a contract--you can get at office supply store--then they goto bank and send everything to a lawyer
2) For Sale by Owner owner financing---they pay a good down payment,you set up payment plan--enough to cover the mortage plus interest,they pay for repairs and taxes,insurance--if they do not pay the house is yours again--then they can get a loan later when the price is lower or loans are easier to get--not sure if you can do this with a mortage but you could have this recorded at the court house --we are offering this on the house above but it is paid off. There is risk involved with this --might damage house--

Amanda Grant said...

Is it possible for you to get a renter? We were unable to sell our first home before buying the second, so (with the help of our realtor) we found a renter and she's been there for almost 2 years now. Her rent check covers the mortgage and taxes. The first year we paid a little bit out of pocket, but the second year we raised rent a bit and now make a tiny profit. Actually, year one rent and year two rent even out and we aren't making any money. But having a renter is a good option when a sale would only leave you in debt. Good luck!