is selling his townhouse and moving in with me. In order to close on the sale, he will have to come up with about $10,000.00 for closing costs (including taxes and accured interest). He is already owes $40,000.00 in other debt. My question is ..should he go into more debt to close on the house or should he just let it go to forclosure?
2006-10-27 00:42:05 · 8 answers · asked by pure_24kt 2 in Business & Finance ➔ Renting & Real Estate
Please understand...there is no equality in the house. He will no money from the sell of the house and will owe 10,000.00 just to get rid of it !!
2006-10-27 00:55:42 · update #1
I would avoid foreclosure at all costs. It's very damaging to his credit rating.
If your son can get out of the sales contract (another issue in itself)...then maybe he could rent out the place to cover the mortgage payment? Many times, a borrower is willing to pay a little higher payment on a "lease option" or "rent to own" deal, with the option to buy the house at a later date (like 1 or 2 years).
If that's not a viable option, there's plenty of real estate investors that would be able to negotiate a short sale with the bank, which means the bank would take a lower amount as a payoff in lieu of foreclosure. That's another option if it gets that far (if the payments get behind). Depending on your area, I might be able to recommend somebody to help you.
2006-10-27 05:38:21 · answer #1 · answered by Anonymous · 0⤊ 0⤋
That's a tough one. Is he under contract to sell? It sounds like he sold it for exactly what he owes on it now has extras to pay.
Personally, I wouldn't pay anything to sell my house, he needs a higher purchase price to get in the clear. Can he work this out with the buyers? If not, he can back out of the agreement (if he has one) and look for future lawsuits from the buyers and/or the realtor if he contracted to sell for full price of the listing.
He can contact his mortgage company for a "short sale" figure, they may reduce the interest owed, etc., look it up here: http://www.ehow.com/how_8132_short-sale.html
This gets complicated. It sounds like he's in for a bankruptcy, too. Either way, it will free up his life. No, I wouldn't pay to close on the townhouse. Both a foreclosure and a bankruptcy will hurt his credit, but its hurt already, I'm sure.
Glad you're helping him, but get him on his feet REAL soon or you will only be hindering him, too. Good Luck!
(dave S....it's not a car, it's a house, he won't have to repay any of it if it's repossessed!...wrong advice!)
2006-10-27 00:56:50 · answer #2 · answered by Barbara 5 · 0⤊ 0⤋
Don't you dare consider loaning/giving him the $10K he needs to sell his house. If he is unable to sell it for the amount owed, he can't complete the sale because the lender won't clear title until they are paid off.
The only way he could sell it $10K short is to ask the lender to approved a short sale. They will agree if he can bring them an offer. The shortfall then becomes an unsecured debt, which given his current debt load is really no big deal.
He should sell the house himself only if he can walk away clean, or ask the bank for a short sale. He obviously hasn't learned to control his finances and is now hoping you will fix it for him.
He didn't get into such massive debt over night and owing you $10K isn't going to fix the root problem. Don't become one of his creditors!!!!!!
2006-10-27 17:45:14 · answer #3 · answered by Paula M 5 · 0⤊ 0⤋
Close on the house and pay off the other debt with an equity loan from the town house. The consolidated payment should be manageable and he will have gained equity that should continue to grow. Otherwise he will have very little to show if foreclosure is the option chosen!
2006-10-27 00:45:48 · answer #4 · answered by r g 3 · 0⤊ 1⤋
its a good idea to understand what type of debt he is incurring. 40k in credit card? in personal? in business?
If its credit card, he can always go to any non-profit to negotitate with creditor to lower the payment to a level that he can afford.
Or he can rearranging the mortgage payment, like extend the amortization term to a longer to lower the payment and how can make the minimum on other debts
If he must sell the house, then sell his car.... back to square 1.
2006-10-27 02:05:11 · answer #5 · answered by davidkwankwokfai 3 · 0⤊ 0⤋
You are almost always better off selling, becuase in foreclosure, the bank will sell it off and apply the proceds against the mortgage. Typically, they will end up getting a pretty low price for it. But your son is still liable for any remaing amount on the mortgage. In other words, you will end up paying the 10k anyway.
2006-10-27 00:53:08 · answer #6 · answered by Anonymous · 0⤊ 1⤋
All good advice.
I would just add that protecting your credit when you are young is important for so many reasons including building character. Americans that think they can get out of the results of their life choices they make end up spiralling into deeper and deeper holes they can never get out. Then they start believing in lotto....
2006-10-27 02:39:04 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Seek legal advice. Don't do anything that would jeapardize your assets or put you at risk. If your son goes bankrupt he has many years to recover.
2006-10-27 00:51:45 · answer #8 · answered by waggy_33 6 · 0⤊ 0⤋