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Need some perspective
I mostly lurk, but a home buying question if anyone can help.
My husband and I bought our home in 2007, and now are looking to move. Problem is, we'll definitely lose money on our home. We are trying to figure out if it's worth it to take the loss in order to take advantage of the low interest rates/low housing costs, or if we're crazy to throw away so much money and should just stick it out until the market comes back up.
In this market, our house would probably list for about what we owe on our mortgage, and we are not expecting to get asking price. We would probably have to bring 10-20k to closing, depending on what our home sells for and including realtors fees. We have the $, but it would eat up our downpayment on a new home. So we would move in with my parents for 3-6 months in order to save up a new downpayment.
Our REA is saying that the market will be low for another 5ish years in our area, and we really want to get into a better school system for our kids asap. So we know we'll be taking a loss regardless. Part of me feels like we should just suck it up and do it now before the kids start school and while we know the interest rates are low, who knows what rates will be next year or the year after. Another part of me thinks we should save for another year and then list, and hopefully avoid having to move in with my parents. I just am at a total loss.
Can anyone offer any advice? Thanks for reading!
Re: Need some perspective
I'm a REALTOR?, now keep in mind I do not know your particular market. However I'm in a military community where people are constantly coming, and going. So there are quite a few situations where people have to move after say 2-3 years. Sometimes the home doesn't sell quickly, and since they have to relocate they choose to rent out their homes.
Even if you have a slow market, your rental market is probably pretty hot. There are lots of times where if you can rent your home out for at least the mortgage payment (plus a small fee tacked on for property management services included in the tenants rent payment) a mortgage company will be more inclined to give you a loan for another place.
I never recommend taking a loss on a property if you can help it. Try and rent it out for a few years and maybe sell again later. I'd recommend using a property management company; they take care of the property, find suitable tenants, and collect your rental payments for you then give you a check each month. I don't advise individuals simply looking to rent out their house to become landlords. Many landlords have been sued by tenants for simply unknowingly breaking lots of laws, from anything from how you are holding the security deposit, to using discriminatory language in your ads, to violating tenants rights. A property management company will know and abide by the laws. Check out different PM companies around your area. Like everywhere else some are really bad and some are really good.
Hope this helps
Also: Almost all landlords make a decent profit off of their properties. Consider it income property. You can also claim repairs, and lots of other things for your income property that you cant claim on your personal home on your taxes every year.
Um...that's a blanket statement and not true at all. Maybe investment landlords make money, but the majority of the people I know trying to get out of underwater homes do not. They're happy if they break even.
We are in a similar situation minus school district concerns. We are staying put for now. We feel that the market in our area won't recover so fast that we need to move now. We think that we will spend some time bettering our finances to take the hit in a year or two. We just did a HARP refi to lower our payments and use the money saved to pay down the principal, pay off some smaller loans we have, and invest/save. We hope by waiting a bit that while we will still take a significant loss on the house, it won't hurt as much.