We purchased our home (condo) in December of 2005, buying in at the height of the market in Naples, FL. Since then, we have come to the sobering realization that we are in over our proverbial 'financial heads' at this point. We put 1% down and used the rest of our money for closing costs, buying our 2 bedroom - 1 bath condo for just under $275,000 structured with a 1st and 2nd mortgage. Our mortgage carries a 3-year pre-payment penalty and with closing and realtor fees, we're not sure we can even afford to sell the condo. (Factoring the drop in the market.)
We appear to be 'upside down' on the mortgage. Is there anything anyone can suggest? Will banks allow you to sell and carry a portion of the unpaid loan as a personal credit line after closing? Carrying the monthly payment on the 1st and 2nd mortgage, plus HOA fees and property taxes, is draining us each and every month.
2007-02-17 05:43:22 · 4 answers · asked by Ocean D 1 in Business & Finance ➔ Renting & Real Estate
You can look at recent sales in the area to see if the market has significantly appreciated during the past year to where you can sell at $300,000 or more. The line of credit plan likely won't be accepted because the bank won't have anything to attach the credit line to as they do now the house itself is collateral.
Is the market such that you can rent it out for the next couple of years at a price that will meet your monthly obligation? This way you could rent in a cheaper location until at least the prepayment period has ended.
2007-02-17 05:56:40 · answer #1 · answered by Venita Peyton 6 · 0⤊ 0⤋
Much of the answer to your question is based on your contract, including the CC&R's of your Condo Association. Generally speaking however, you have two options that are commonly used in this situation: 1) sell the condo and come up with cash at closing to pay off the remainder of the loan 2) Lease Option the condo. Beware that your lender may have a due on sale clause in your contract, but most won't exercise it if you lease option because they would rather receive payments with interest than to receive the lump sum which loses them money. Call several brokers in your area if you'd like to investigate lease options. We do many of them every year, but many brokers don't understand them. So call around.
2007-02-21 11:33:10 · answer #2 · answered by Jay S 3 · 0⤊ 0⤋
You are not alone in this position, but there is not much you can do.
The suggestion of letting someone assume your mortgage is a bad idea, plus it the condo is not worth 275k why would they want to pay that?
Sounds like you should contact the bank and explain the situation to them.
They may let you have a short sale if you can prove you are upside down in the loan.
Good luck
2007-02-17 14:59:25 · answer #3 · answered by frankie b 5 · 0⤊ 0⤋
You can try to sell your house on the condition that the buyer assumes your loan with a novation. If they assume your loan they will just take over where your leaving off so there will be no pre payment penalty, you must get it with the novation because if you don't then if they default you can be sued. The novation ensures you can't be held responsible.
2007-02-17 14:42:06 · answer #4 · answered by melissaw219 3 · 0⤊ 0⤋