When does it make sense to stop paying on house

[Auto_Body_Chick]

I am a$$ backwards in my house. I was only supposed to be here for two years until DD was ready for school. Since we purchased the house SO has lost his FT job (construction) and is working odd jobs to make money. He makes less then half of what he did when I bought the house.

 

Six years later I'm here, in a house that is too small, $55K negative equity. I pay 3K a year for my daughter to go to private school because the schools here are gross. My son will be starting school in two years. Our property taxes just went up and I live in a crap town where I wouldn't want to use the things that my taxes pay for.

 

The park equipment is full of graffiti, poor education test scores, we're the minority, families with kids my kids' age don't speak English, which is the only language we know. I really dislike it here. I'd like to move where my kids could go to public school and we could have friends in the neighborhood.

 

I filed BK in 10/2008. I included the house and a HELOC that we have. I never reaffirmed and I know that I could walk away but I feel SOOOOOOO guilty.

 

I keep telling myself it's a business decision but it's not making me feel any better. It's terrifying to think that I would stop making my mortgage payment. Seems like such a waste. I've paid for this house for 6 years now.

 

Any thoughts? Has anyone else walked away from their house?

 

Please don't be mean about your opinions. TIA!

[Bobbydebt]

I dont know anything BK's or walking away from your house, but I do have beautiful 6 month old daughter (my first). I would 100% walk away if I were in your position.

 

I would not sacrifice my daughters future because of my guilt.

 

People can disagree and point fingers.

 

 

Edited to remove masked profanity. Please?

Edited February 9, 2010 by LKH

[outtawork]

You have to do what you think is right for your family.

 

If that means moving and leaving that house behind, so be it. Living there a few months without paying will help you build up a little cash to move on.

 

And if you've only paid on the house for 6 years, no biggie. Most of that was probably just interest anyway.

 

Where ever you move to, look into owner financing. There are a lot of owners out there right now trying to sell houses and can't move them because of the economy and will entertain the prospect of financing themselves, so no closing points, credit checks, etc.

[sherman_must_die]

Walking away.....

 

Some hope for foreclosure.....

[VK]

I am a$$ backwards in my house. I was only supposed to be here for two years until DD was ready for school. Since we purchased the house SO has lost his FT job (construction) and is working odd jobs to make money. He makes less then half of what he did when I bought the house.

 

Six years later I'm here, in a house that is too small, $55K negative equity. I pay 3K a year for my daughter to go to private school because the schools here are gross. My son will be starting school in two years. Our property taxes just went up and I live in a crap town where I wouldn't want to use the things that my taxes pay for.

 

The park equipment is full of graffiti, poor education test scores, we're the minority, families with kids my kids' age don't speak English, which is the only language we know. I really dislike it here. I'd like to move where my kids could go to public school and we could have friends in the neighborhood.

 

I filed BK in 10/2008. I included the house and a HELOC that we have. I never reaffirmed and I know that I could walk away but I feel SOOOOOOO guilty.

 

I keep telling myself it's a business decision but it's not making me feel any better. It's terrifying to think that I would stop making my mortgage payment. Seems like such a waste. I've paid for this house for 6 years now.

 

Any thoughts? Has anyone else walked away from their house?

 

Please don't be mean about your opinions. TIA!

 

 

ABC,

 

I have posted on this before - my opinion is one should make the most financial and emotional sense for one's family. Like Bobbydebt said, you have to do what's best for your and your kids

 

Some questions to consider:

 

1) will you be on the hook for any of the loss/other expenses?

2) will you rent in the same neighborhood? How much would be your rent for similar # of bedrooms vs. mortgage/heloc/insurance and other house expenses?

3) will your kids have to change schools, and what their ability to attend same schools and have same kids around worth to you?

4) what would be the tax implications?

5) is the loan on your name or both? if your credit goes down by 300 points, will your SO be able to get financing for CCs, cars, etc on his credit?

 

There are probably much more things to think about...put together a spreadsheet of all pluses and minuses, but, at the end, do what's best for your family,

 

VK

[Floridian]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

[GEORGE]

I couldn't walk away...

 

But if you have NO CHOICE

 

YOU are not that bad compared to the poster boy who sells SNAKE OIL

 

He walked away from $1,000,000's

[VK]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

I disagree with that.......As George would say - "IT'S JUST BUSINESS"

 

walking away from the agreement has consequences, and ABC will pay them - losing a house, taking several hundred points of FICO score.

 

Sometimes, walking away is responsible way to act. You are first and foremost responsible for your kids and your family.....and there well being....and being able to provide for them with food, best education available to your means, etc. If walking away from the house will help you take care of your family, then the choice is somewhat clear.

 

VK

Edited February 9, 2010 by VK

[GEORGE]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

I disagree with that.......As George would say - "IT'S JUST BUSINESS"

 

walking away from the agreement has consequences, and ABC will pay them - losing a house, taking several hundred points of FICO score.

 

Sometimes, walking away is responsible way to act. You are first and foremost responsible for your kids and your family.....and there well being....and being able to provide for them with food, best education available to your means, etc. If walking away from the house will help you take care of your family, then the choice is somewhat clear.

 

VK

GET IT STRAIGHT...I DON'T SAY "IT IS JUST BUSINESS"

 

People here keep on spouting it as their mantra and SHOVING DOWN EVERYBODY'S THROAT

 

YOU GET A CLD FOR NO REASON = IIJB

 

YOU GET YOUR ACCOUNT CLOSED FOR NO REASON = IIJB

 

YOU GET APR JACKED FOR NO REASON = IIJB

 

I'm supposed to just take it and be happy

 

I'm not supposed to complain at all

==================================

Just be a good little boy and sit in the corner

 

"WHAT DID I DO WRONG"

 

Nothing...I just like punishing you because I can

==================================

[radi8]

ABC, you already "walked away", the loans are discharged in BK. It's not a question of responsibility to the lender any longer, those ties were severed in 2008.

You are feeling guilty about making a decision that in reality you've already made, and is over and done with. At this point it's merely a question of whether you prefer to stay- or to go.

[radi8]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

Speaking of lessons, the author of that blog could use one in spelling. It's "losing", not "loosing"- an error that is repeated multiple times.

[Auto_Body_Chick]

ABC, you already "walked away", the loans are discharged in BK. It's not a question of responsibility to the lender any longer, those ties were severed in 2008.

You are feeling guilty about making a decision that in reality you've already made, and is over and done with. At this point it's merely a question of whether you prefer to stay- or to go.

 

 

That's what I was thinking....

 

I already legally walked away. The house is in my name only. I just wonder what I would be left with and what I would be responsible for. Taxes, homeowners insurance, etc? Is my CR going to get worse?

 

"Loose and lose" are a huge pet peeve for me too, Radi8, lol.

 

Thanks for all of the posts so far!!!

Edited February 9, 2010 by Auto_Body_Chick

[ClarkeCO]

Honestly, I don't have any good or bad advice. Just wanted to wish you good luck with your decision.

[carltonbanks]

Can you rent your house out for anything close to your Mortgage payment? It sounds like you are capable of making the payments, but you just dont like where you live. If so treating the house as a rental property may be a better option. Property Management companies may be able to handle the transactions for a fee.

[swanky]

The only time someone should walk away is if they just cannot afford to pay.

Otherwise they should NEVER be allowed to complain about anything

to do with the economy ever again. They have just become

a major part of what is wrong with this country. The ones who meet

their financial obligations, even when it is not convenient are the ones

who end up getting the short end.

[swanky]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

Totally agree with the author of that article.

[Auto_Body_Chick]

Who says I have to tell my 8 and 3 year old about my financial mistakes? All I can do is make better decisions going forward. First of all teach myself how to handle money, then teach them so they don't make the same mistakes.

 

Not justifying anything... I still want to discuss this, but seriously. I wouldn't talk to my kids about financial things. They're just babies and don't need to know.

 

My mortgages are $2200.00 p/m. I'd be lucky to get $1500.00 to rent it out. Then I'd also need to rent somewhere else, pay rental taxes, etc. I've thought of short sale but my mortgage is an FHA. Wells Fargo isn't going to want to work with me because my mortgage is already guaranteed, right?

Edited February 9, 2010 by Auto_Body_Chick

[NeverQuietHere]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

Woa. Um, technically she's not responsible for it anymore.

 

ABC, you already "walked away", the loans are discharged in BK. It's not a question of responsibility to the lender any longer, those ties were severed in 2008.

You are feeling guilty about making a decision that in reality you've already made, and is over and done with. At this point it's merely a question of whether you prefer to stay- or to go.

 

YEP!!!!

 

I'm sorry you are getting such judgmental answers. Please. You need to do what's best for your family. This was already IIB so why keep paying on something that technically you don't have to pay on and why do it when you aren't even happy where you are. kwim? IT IS BUSINESS. It took me a LOOONG to figure that out myself before and after we filed. I am SOOOO glad we walked away from our house (even though it was in a great neighborhood) but we would've ended up having to anyway (ARM went up to 11.5%)

 

I think someone saying "What are you teaching your kids?" Your kids are too young to even know about any of the adult side of this anyway. As for swanky's answer: are you kidding? Seriously.

 

Again, what's with all the judgmental attitudes? ABC is NOT what's wrong with this country and to say that kind of stuff....did you read the part where she said DH is making LESS THAN HALF of what he was making? It's not like ABC went out and bought a house that she knew they couldn't afford in the first place.

[Uncle Leo]

I'm generally more of the "stay and make it work" bent on this subject, but I also consider individual circumstances, and based on what you describe here... if it were me... I'd go ahead and walk and move. At least in part due to the fact that you did not reaffirm and the mortgage is already IIB anyway.

[swanky]

This is a question of responsibility, I would say. Do you want to tell your kids that you walked away from a loan you signed and agreed to pay every month? What kind of lesson is that going to each? I just read an article about that, which I found really good.

 

Woa. Um, technically she's not responsible for it anymore.

 

ABC, you already "walked away", the loans are discharged in BK. It's not a question of responsibility to the lender any longer, those ties were severed in 2008.

You are feeling guilty about making a decision that in reality you've already made, and is over and done with. At this point it's merely a question of whether you prefer to stay- or to go.

 

YEP!!!!

 

I'm sorry you are getting such judgmental answers. Please. You need to do what's best for your family. This was already IIB so why keep paying on something that technically you don't have to pay on and why do it when you aren't even happy where you are. kwim? IT IS BUSINESS. It took me a LOOONG to figure that out myself before and after we filed. I am SOOOO glad we walked away from our house (even though it was in a great neighborhood) but we would've ended up having to anyway (ARM went up to 11.5%)

 

I think someone saying "What are you teaching your kids?" Your kids are too young to even know about any of the adult side of this anyway. As for swanky's answer: are you kidding? Seriously.

 

Again, what's with all the judgmental attitudes? ABC is NOT what's wrong with this country and to say that kind of stuff....did you read the part where she said DH is making LESS THAN HALF of what he was making? It's not like ABC went out and bought a house that she knew they couldn't afford in the first place.

 

I was answering the original question. "When does it make sense to stop paying on a house?" I am not referring to the OP. I am referring to the question.

I think you are the one who is making it personal. And yes, I was totally serious in my response.

[NeverQuietHere]

I'm not making it personal. If you think that she should stick it out, even though it's been IIB, then you should just say that. Your response says so much more than just that.

[radi8]

I just wonder what I would be left with and what I would be responsible for. Taxes, homeowners insurance, etc? Is my CR going to get worse?

 

Taxes-

Lender will pay them out of escrow funds, which you should already have built up for this year.

You wouldn't be responsible in any case, taxes become a lien against the property if they aren't paid, not a personal debt.

 

Homeowner's insurance-

you'll want to keep the property insured until the title is transferred out of your name. You likely wouldn't be liable if there were a fire, flood, etc- the lender will force-place insurance for that if you let it lapse- but the liability aspect is a concern. Someone slips and falls on the sidewalk, they can sue you.

 

Credit report-

the mortgages should already be reporting as "IIB" with a zero-balance. 50/50 whether they add a "foreclosed" notation after that. Opinions are mixed as to whether or not doing so is legal, IIB is supposed to be a final disposition.

[brazen]

The only time someone should walk away is if they just cannot afford to pay.

Otherwise they should NEVER be allowed to complain about anything

to do with the economy ever again. They have just become

a major part of what is wrong with this country. The ones who meet

their financial obligations, even when it is not convenient are the ones

who end up getting the short end.

 

Obviously, you didn't read OP included the mortgage in her BK.

[Lynn37]

ABC

 

You have to do what is right for your children and your peace of mind.

Although we just got a new home, I drive my DD to school everyday in another county. I am still paying rent at the apartment we were living in so I can have an address in the same county DD goes to school in. I doing it because the new school near our new home is still not open, and she will have to bused 40 miles to a school I would not send a puppy to.

 

Good luck

[beli]

If it were me, and the house was IIB already, and in the neighborhood you said, I'd be putting that 2k a month payment into a savings account for another house/and moving expenses.

 

However, with it being two years, I'm surprised that the mortgage company hasn't said anything, and i'm wondering tho since you've been paying for it, they'll try the "You re-affirmed it after bankruptcy because you paid on it routine"? even tho you didn't.

 

I'd talk it over with your bankruptcy attorney and see what they say what possible actions the mortgage lender might take.

 

While everyone says you "walked away" in 2008, you were still paying on it, and might have some repercussions from the mortgage lender that may end up with you getting an attorney involved. That's my main concern. We all know how banks want to screw us over.. and this just situation is just ripe for it even tho you did not re-affirm it.