is this bad? or a good decision?

Question

We own our home. 3br 2ba . Lived there a year. a couple months ago my husband lost his job and now he has one but makes about 4 or 5 dollars less an hour. So now we realize we cant afford our house. So there is me and him, a 6 year old boy, and another boy on the way.......

we are selling our house... or trying to at this moment, and moving into a 2 br apt with 1 bath...... The 6 year old and the new baby will share a room.

I feel like a failure because we just bought a house and now we have to start all over at the bottom in an apt. again. and the boys have to share a room. I can't even have a baby nursery.

I know it'll be better because it's cheaper and in a year maybe we can buy another house that's not so expensive but i still feel sad. I mean, my son is changing schools and we can't sit in our back yard and chill. We had to sell our trampoline amoung other stuff that we worked so hard to get.

the positive side is, it's cheaper, has a garden whirlpool bathtub, 2 pools, volley ball courts, basketball courts, tanning beds, fitness room, ect.

Answer 1

$4 to $5 an hour is only $8,000 to $10,000 a year. If that amount a year puts you in a situation that you can't afford to continue living in the same house, you probably bought a more expensive house than you should have. You should budget your expenditures and start saving and investing a portion of your income so that you can weather the down times. The fact that you had to sell stuff indicates that you have not budgeted properly.

In regards to the capital gain tax on the sale mentioned above, there are exceptions that allow you to take a partial exclusion of the gain. A loss of job may qualify as an exception. Find a qualified tax professional to help you with this issue.

All that being said, feeling sad due to unexpected setbacks and loss is normal. This is something you will have to deal with and work through. That is no reason to feel like a failure. Handle the situation with grace & dignity and you will become a better person for it. You will only be a failure regarding this if you don't use the situation to grow and become a better person. How well you handle adversity has more to do with how successful you are than how you handle the prosperous times.

I will you well as you progress through this difficult time in your life.

Answer 2

I have to agree with a previous poster who said 10k less a year and not being able to afford the mortgage just means you bought too much home. Here is my 2 cents: If you have any equity to cover selling costs and can still walk away with some cash.. at least TRY to sell the house. Can you take a part time job or your husband a weekend job? Maybe until you give the house a chance to sell maybe 3-6 months? If you sell the home and pocket some money that would be great.
You could rent and save that money for a downpayment for a deal down the road. Home prices are falling and there will be many opps to buy a home again. Just because things are a cetain way NOW doesn't mean they will be like this FOREVER. hang in there and good luck!!

Answer 3

One of the things you may consider is renting the place. Is it possible that you can get equivalent rent to meet your mortgage, tax, and insurance payments? If you can keep it even close, you will be in better shape. Remember, you will be able to write off some of the interest on your taxes and if times get better, you could move back in.

If you really must sell, since you have lived in the home less than two years you will have to pay capital gains tax and possibly a prepayment penalty (depending on your loan). This could turn a bad situation into a worse one. Another thing to consider is you may not be able to get what you paid for it a year ago. If this is the case, and you cannot rent it out, get a Realtor experienced in short-sales and see if they can negotiate with your bank to get you out of the deal all together.

You shouldn't feel like a failure. Your situation is common and a sign of the times. It doesn't mean that you did anything wrong, so chin up, you are doing what you can. In making the attempt to do things right you are teaching your children that sacrifice is preferable to overwhelming debt and providing and excellent example of monetary responsibility.

Answer 4

Now is not a good time to put a house on the market as prices are dropping and the market is getting flooded. See if you can refinance at a lower rate or a longer term, but stay away from adjustable mortgages. Maybe grab a part time job to help out until things get better.

Answer 5

You are doing a good thing. It is hard to start over but it sometimes is best. Set goals for yourself. Plan when you will be able to buy again. Don't get discouraged if you have further setbacks, just keep working toward the future.

Answer 6

you are doing a fine thing. but if i was in your situation i whould also let people rent the other house i've bought , renting a house kan give you a lot of cash.