Posted on: 01st Aug, 2008 12:52 pm
like many people, my home is quickly losing value and i owe more on my home than it's worth. what are my options?
we can afford our mortgage payments right now and our arm isn't scheduled to adjust until august 2010 (it's at 5% now and includes principal/interest). i don't think we are very good candidates for bankruptcy since it costs us about $2500/month for mortgage/taxes/equity loan/insurance payments and we earn about $5500/mo. however, it would be about $700-800/mo cheaper for us to rent now than to own. with no end in sight to the housing crisis, it seems best to get rid of our home before it loses any more value and save money to prepare for the economic recession ahead.
the fair market value of our home is probably $175k now. however, we owe about $330k in a refinanced mortgage, and another $80k in a home equity loan. i would like to just surrender our deed in lieu of foreclosure to our lender, but don't want to be socked with taxes later if our bank files a 1099 for forgiven debt. also, would my lender take back a loan like this? do they have the option of making me keep my home and only foreclose if i miss payments? how does it work if i want to give up my home and walk away?
would the irs mortgage forgiveness debt relief act of 2007 help me? this is our principal residence, but we've refinanced and got about $100k in cash out. if the lender were to forgive our debt, would we have to claim that $100k as income in our taxes?
also, would they forgive our second mortgage too? what if we try to sell our house at the current market value? would we have pay the rest of what we owe at the closing? what are the tax consequences of a short sale?
can anybody help us decide what to do? are bankruptcy or foreclosure options i should consider? would i owe taxes after a foreclosure? could i even declare bankruptcy if we're making the current payments easily and have a great credit score?
please help!
we can afford our mortgage payments right now and our arm isn't scheduled to adjust until august 2010 (it's at 5% now and includes principal/interest). i don't think we are very good candidates for bankruptcy since it costs us about $2500/month for mortgage/taxes/equity loan/insurance payments and we earn about $5500/mo. however, it would be about $700-800/mo cheaper for us to rent now than to own. with no end in sight to the housing crisis, it seems best to get rid of our home before it loses any more value and save money to prepare for the economic recession ahead.
the fair market value of our home is probably $175k now. however, we owe about $330k in a refinanced mortgage, and another $80k in a home equity loan. i would like to just surrender our deed in lieu of foreclosure to our lender, but don't want to be socked with taxes later if our bank files a 1099 for forgiven debt. also, would my lender take back a loan like this? do they have the option of making me keep my home and only foreclose if i miss payments? how does it work if i want to give up my home and walk away?
would the irs mortgage forgiveness debt relief act of 2007 help me? this is our principal residence, but we've refinanced and got about $100k in cash out. if the lender were to forgive our debt, would we have to claim that $100k as income in our taxes?
also, would they forgive our second mortgage too? what if we try to sell our house at the current market value? would we have pay the rest of what we owe at the closing? what are the tax consequences of a short sale?
can anybody help us decide what to do? are bankruptcy or foreclosure options i should consider? would i owe taxes after a foreclosure? could i even declare bankruptcy if we're making the current payments easily and have a great credit score?
please help!
I appreciate your advice. Thanks!
You may want to look into doing a "short sale" it essentially gives the deed back to the lender without tax penalty but you do have to be behind on payments before the lender agrees to short sale. Its always a better option than forclosure.