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michelle

keeping the house or savings

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I know this probably needs to be in a budget area of the forum but considering its an issue for us considering prepping and the economy I feel it should still be here. I posted a while back about us starting work on our trailer and letting go of our house. After some stress and worry we really don't want to give up our house. Living in the trailer will lower costs on commuting and energy costs so we're thinking about just staying there and keeping the house and note for now. We've even considered getting DH a moped. It'd be an expensive for now (about $800) but would save a LOT of money in fuel costs in the long run (think $100/mo).

 

How hard would you work to keep a house in today's economy if you already had a paid for home and property? I love my house and want to keep it but we just got it not long ago and are forever from having it paid for. Part of me wants to fight to the death for my house but the other part says without that note we could do some massive preps quick and be set for anything. Oh dear, I'm just so confused lately. shrug

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Hard decision.

 

I'm not kidding when I say this....

 

PRAY.

 

Then LISTEN.

 

The direction may not come immediately but I can tell you that those who ask do receive.

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brimichelle....hard choice, indeed. Pray for the answer is good advice. God does the strangest things sometimes. lol Have you considered trying to rent the house to keep the payments going while you live in the trailer/property? Renters are sometimes wonderful people (like DH and I laugh ...we've been here 10+ yrs now and treat the place like our own) but sometimes renters are horror stories so it's a gamble too.

 

With so much in our world that has the potential for being topsy-turvy...you are not alone in confusion. grouphug

 

MtRider

 

 

 

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God will answer your prayers and give you direction, bring it to Him!

 

He has been doing tremendous work in my heart, let me tell you! I used to dabble in real estate investing and wanted to build beautiful homes. I live in a rapidly growing area in the country and loved to go look at homes, probably been in thousands of them. I knew what I liked in a house, I had floor plans and moldings picked out, countertops and tile, I knew I wanted a mudroom (something you hardly ever see down here), etc etc. I knew what I liked and it was not cheap. whistling

 

BUT... my ideas and priorities have changed DRASTICALLY! We actually went and looked at 3.5 acres of land last week (lease option) that had a TRAILER on it! Please understand I'm not bashing trailers or anyone who has one, I just never saw me living in one, like I said, I had my floor plans already picked out. I'm just sharing this with you as it has has been a HUGE growth area for me, and I welcome it. What is important? The land w/ a roof over our heads in whatever shape or form or size (if its liveable, fixable, its a go). The vanity of some of the things I used to value hit me pretty hard. My priorities have really changed and even a girlfriend commented on that.

 

rahrahrahrahrahrahrahrah

 

When you see big, expensive, beautiful stuff around you all the time you get used to it, you expect or hope to have "that" too one day. But I realize that that is not the stuff that Life is made of, it is made of the Lord and family. THOSE are our priorities and frankly, our house payment of $1100 has been tough (been though a job layoff, new job paying considerably less, I'm homeschooling, cars are getting old...), its so hard to prep when money is so tight. I want to MOVE!

 

I will say that this whole layoff thing though has really been a blessing in disguise, it has really been one of the key tools that has helped me refocus and reprioritize.

 

I used to love my house too, but now I see it as a hindrance. Its starting to need repairs, and who wants to put all this money in a house that honestly is not really what we need and does not support our goals of self-sufficiency in leaner times, and frankly just might be foreclosed upon when things get tougher in the economy.

 

And I want to get further away from the city, and get further away from the sheeple (having savings will be a big big deal when the economy blows)

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Going to ask some hard questions - please don't take them personally - but to sort through your decision I think you have to be brutally frank with yourself:

 

1) Is the issue that you cannot afford to pay on the note that you committed to (you entered into a contract) because you will not eat, pay required taxes, or get to your income producing job any longer? Or is it that you now see better uses for the money (preps) and have buyers remorse?

 

2) If you choose to default on a contract - are you prepared to not have credit extended to you for up to seven years - or at least not at rates you will be able to afford?

 

3) Have you explored other options to address the short term funding problem - second job? sell other items you are not really needing - like extra vehicles, duplicate tools, etc?

 

4) You indicated this house was purchased relatively recently - obviously you felt it was worth it and you could afford the debt obligation at the time you signed the papers - what has changed since then? Lost a job?

 

Contractual commitments are serious matters. Great care should be exercised not to enter into them without full understanding and after careful consideration of your ability to fulfill the expectations. There is a penalty to be paid for going back on your contractual commitments.

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brimichelle

 

Did you think about renting the house, even if big enough, make one appartment and an efficiency app... even if you rent just to break even, you still own the property.

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Someone I know is in a similar situation here. They decided to rent out the paid-for mobile home, and use the income to add a wood stove to the new home, which made the energy bill more affordable. The mom got a part-time job weekends. (No child care, the hubby is home weekends) They say they are happy to be in the house with the added room and feel that now it is easier financially with the slightly added income from the rental and her few hours extra job. They are just as worried as we all are about the economy but this way, so far, they have managed to keep both properties.

 

You have to decide this for yourself, and think about your own comfort zone, and what you can live with. I have known people who in the late 70's gave up their homes, thinking the SHTF was coming then. They became very bitter about this when nothing catasrophic happened and they had to start over. Pray carefully, and make a decision you can live with without regret.

 

 

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Does it have to be a moped? My DH used a bike for the first 6 years we were married. He is not light weight so I had to be a GOOD bike smile but with that and rain gear, we lived in Oregon, he just made it work and really enjoyed it since I made him give up his gym membership.

 

Just a note to all as far as trailers are concerned, How well made is it? DH stepped through the roof of our first one as it had little support in the roof. Also what are the chances of a tornado? or other weather related disaster? I prayed really hard that the Lord would keep us safe while we lived in that trailer and thank Goodness He did smile

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Brimchelle, I'm really confused. You have posted on this issue from a couple different angles. I responded to one of your posts not too long ago where you indicated the lender had agreed to allow a short sale to help you avoid forclosure.

 

Yet you recently posted in the "Wake Me Up Quick" thread that you are renting to own and do not have a mortgage. shrug

 

We can offer better suggestions if we know what the situation is.

 

Either way though, I agree with the previous posts that there is a moral responsibility to meet contractual obligations, even if it means some sacrifice. Folks "walking away" from homes are contributing the the decrease in home values, it's a vicious circle that is hurting everyone.

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I'll tell you what I tell clients on this issue. Think with your head and not your heart. Your heart will tell you that you love that house and want to keep it. Your head will look at the facts and make a decision based on what is best financially for your future.

 

What would I do? Well, given the current economical issues in this country I would go for the best financial solution that would allow me to survive long term.

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Well we were going to try to rent-to-own the house but the person decided not to get it. We're fixing the trailer and as soon as we move back into it we're going to put the house up for rent. I have talked to the mortgage company about our options as far as a quick sale or something should we need to but right now we are trying to keep the house. I don't want or feel right to walk away from the house so we're going to try to keep it as long as possible but I'm just terrified of putting all our money into it and using up savings where if TSHTF we're stuck without any back up and the house is gone.

 

When we bought the house we could definitely afford it but it is a high note, $1200 a mo. We've since paid off our car and credit cards. This has lowered our credit score so we can't refinance. With the economy going south we're being hit hard with the commute and other expenses. My income is tip based and well its dwindling. I already work part time weekend nights so no child care but the money is getting slimmer. DH's job has also been slowing down lately and I'm worried about how long the company may be open. I'm not wanting to walk away from the house and I'd love to keep it but I'm just worried about us getting to the end of the wire without anymore savings, loss of income, and losing the house anyway. I guess I'm just very confused and worried about making the right decision here.

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There has to be something very wrong with a system that penalizes a person for paying their bills and trying to stay out of debt.

 

If you rent the house be sure you collect first and last months rent and a big damage deposit up front! Check on what you have to do to evict for nonpayment. DON'T allow pets and if you can, restrict the number of people, especially children who live there and insist on inspecting at regular intervals. KNOW your rights as landlords before you rent. Try not to be soft hearted. I learned all this the hard way.

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Brimchelle, A little brain storming going on here, so I'll just throw out some ideas for your consideration:

 

When you paid off the credit cards, did you close the accounts? Having too many open lines of available credit can lower your credit rating, so that might help. Especially if you paid those things off (like a lot of folks) by re-financing and pulling cash out of your home. The debt was just moved around, and you still have all the potential for more debt, so it could lower your score, as you "look" more risky.

 

Something else to consider, so you don't have any unpleasant surprises later, is that if you move out and/or rent, it may result in an increase in taxes and insurance.

 

Definately insurance is more expensive for non-residential or vacant properties, and you will have to have provisions in the policy for a rental. Otherwise, if something happens, you will not be covered. And since it is a mortgage requirement to have effective insurance... well, you can see the potential problems if you are not completely up-front with the insurance company.

 

As for taxes, your real estate taxes are likely calculated at a "homestead" rate. If the property is not your primary residence, taxes will go up.

 

If you have someone prepare your income taxes this year, you may want the ask them about the effect of potential rental income on your financial situation.

 

If you decide to sell, find out if your mortgage has a pre-payment penalty, and ask the lender to waive it. Get it in writing. Also ask any realtor to reduce thier commision. That is typical with short-sales.

 

To try and keep the house....Is hubby willing to take on a second job? Can you find somethig else that is not tip-dependant? Do you have things you can sell, like stereos, theatre systems, big TV, jewelry?

 

I don't know how likely it is that you can find a renter to pay $1200 or more per month to cover your expenses, because the economy is hard on everyone right now. However, that makes it more likley that you have a friend or relaive who is also struggling, and could move in with you and share housing costs.

 

These are not very fun options, but remember, it won't be forever, just to get through a rough patch.

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I'm wondering, can the mortgage company go after your paid off property if you defualt on your mortgage? after all, it is a legal debt and your other property is an asset.

 

I'm not clear on the difference between foreclosing and declaring bankrupcy. Is your other property really safe if you foreclose? You should really get financuial advice from an expert on this.

 

I see a horror story of loosing both properties and having no credit if you aren't very careful and don't get expert advice.

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Actually if you close the credit card accounts it will hurt your credit store. Put them away and don't use them.

 

I'd sell the house. I am pretty sure they can make you sell your other property in a bankruptcy. Renting can be an absolute nightmare.

 

Another option, sell the other property and use the $ to keep the house. Get another job nights during the week so you can save on childcare. Sell everything you can to pay the debt. You don't want to go bankrupt!!

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I agree, selling one of the two properties would be the ideal way to handle your situation. You can have them both for sale at the same time and which ever one sells first keep the other one. Can you find another job that isn't tip dependent or can you babysit a child or two to earn some extra income? There are times when bankruptcy is an the only option. However, all other means to avoid bankruptcy should be exhausted first.

 

 

 

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If they do foreclose the house, you will probably have to file bankrupt in order to protect the other property. You need to check your state laws tho, because they vary quite a bit in how much you can keep thru bankruptcy.

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I'll try to address some of the ideas mentioned. We paid off the debts not moving them around without using anything from the house. But we did cancel the credit cards so thats why it lowered our score I guess although I still think thats very stupid because we did PAY our bills. The other property was DH's inheritance from his dad (died when he was 11) and its all he has left of him. We've fought like hell to keep it from sleazy family so we can't let it go, it'd just kill him. DH's schedule is hard to find another job around but he's working every minute of overtime he can get and hasn't taken a lunchbreak in a week. He did find a parttime job helping some one on Sundays and maybe some Sat. but it'd be better from the other property as its right by it. A little hard to do from the country with gas prices and I'm trying to find some kids to babysit for extra $.

 

Taxes aren't homesteaded right now so that wouldn't change but I do need to check on insurance and other renting rights.

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DH just called and said we have someone offering to buy the house. An old schoolmate he was chatting with about stuff said he wants his kids in this school district and would buy it. One good thing for trying to sell its in the BEST school district for counties around. The other is in the best in that county so either would be great potential for renting or selling. I still have to talk to DH to find out specifics on this guy wanting to buy but maybe we should go ahead and do that. I was wanting to try to keep the house but with the economy it may be wise to just let go of it and sell. All this info has been helpful. We'd be able to afford our note if we move back into the other house and renting this one would help a lot and give us the chance to make some extra payments to try to pay off sooner or down to be able to refinance (there's no prepayment penalty). I'd like to keep it but maybe we should just let go if we can sell.

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This offer to buy the house, if legitimate and for an amount you can deal with, would seem to be the answer to your prayers.

 

Good luck to you,

 

 

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Sell! Better to have your finances under control and you can always save up to buy another house one day while you make your other place home. I know it's hard- we had to sell our house when we moved here at a loss but you'll feel relieved knowing you don't have that over your head right now!

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Sounds like an answer to prayer to me! I'd sell if it will pay off what you owe, even if you don't get any over. Just make sure you don't have to bring cash to closing!

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And with a private sale, there are no real estate commissions, so you'll get more for the house. Do get a good real estate attorney for the settlement. Well worth the few hundred to protect yourself.

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