Posted on: 26th Jan, 2008 06:27 pm
We need out of our CA home. A new job has brought us to another state, and we have hung onto this the CA home as long as we can. We bought the home with $60,000 down and a first mortgage of $400,000 and a second for $60,000. With market downturns, the home is only worth about $370,000 at the very best now. Is our only option foreclosure? We cannot afford to make up the difference.
Where is your home located in CA? I heard the market was soft in some areas but I had no idea it was that bad in some places.
Lisa gave you really good advice, the only other option you may want to explore is to rent the property or sell on contract.
If you can rent the property effectively then you may be able to cover the cost of the property until the market turns in your favor and you can get out without a loss. Renting comes with many risks though- nonpayment by renter, property damage, and legal liability.
Selling the property on contract is another option with risks/benefits. Many buyers many not be able to obtain a mortgage thru a bank, but if you as the seller finance the property for 2-3years until they can get a mortgage... Some of the risks to consider here are- same ones as renting and a due on sale clause (your mortgage may have a clause requiring payoff if you sell it- even on contract). The benefits over renting are that normally the buyers will take better care of the property.
If you can rent the property effectively then you may be able to cover the cost of the property until the market turns in your favor and you can get out without a loss. Renting comes with many risks though- nonpayment by renter, property damage, and legal liability.
Selling the property on contract is another option with risks/benefits. Many buyers many not be able to obtain a mortgage thru a bank, but if you as the seller finance the property for 2-3years until they can get a mortgage... Some of the risks to consider here are- same ones as renting and a due on sale clause (your mortgage may have a clause requiring payoff if you sell it- even on contract). The benefits over renting are that normally the buyers will take better care of the property.
Hi Jmcottam,
I agree with all posters here. Apart from the options suggested, you could do a lease to purchase thereby offering property on rent for a few years an then selling it off to the tenant. You can pay off the loans monthly using the rent payments till the property is sold off and the mortgages are assumed.
However, if the second loan gets paid off through rent payments, then it's only the first that the buyer needs to assume. but you need to have a talk with the lender informing him that you will be involved in such a transaction. This should be done in order to avoid problems, if any, during assumption.
Good luck
I agree with all posters here. Apart from the options suggested, you could do a lease to purchase thereby offering property on rent for a few years an then selling it off to the tenant. You can pay off the loans monthly using the rent payments till the property is sold off and the mortgages are assumed.
However, if the second loan gets paid off through rent payments, then it's only the first that the buyer needs to assume. but you need to have a talk with the lender informing him that you will be involved in such a transaction. This should be done in order to avoid problems, if any, during assumption.
Good luck