Paying the price for paying too much
.floatimg-left-hort { float:left; } .floatimg-left-caption-hort { float:left; margin-bottom:10px; width:300px; margin-right:10px; clear:left;} .floatimg-left-vert { float:left; margin-top:10px; margin-right:15px; width:200px;} .floatimg-left-caption-vert { float:left; margin-right:10px; margin-bottom:10px; font-size: 12px; width:200px;} .floatimg-right-hort { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 300px;} .floatimg-right-caption-hort { float:left; margin-right:10px; margin-bottom:10px; width: 300px; font-size: 12px; } .floatimg-right-vert { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px;} .floatimg-right-caption-vert { float:left; margin-right:10px; margin-bottom:10px; width: 200px; font-size: 12px; } .floatimgright-sidebar { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 200px; border-top-style: double; border-top-color: black; border-bottom-style: double; border-bottom-color: black;} .floatimgright-sidebar p { line-height: 115%; text-indent: 10px; } .floatimgright-sidebar h4 { font-variant:small-caps; } .pullquote { float:right; margin-top:10px; margin-left:10px; margin-bottom:10px; width: 150px; background: url(http://www.dmbusinessdaily.com/DAILY/editorial/extras/closequote.gif) no-repeat bottom right !important ; line-height: 150%; font-size: 125%; border-top: 1px solid; border-bottom: 1px solid;} .floatvidleft { float:left; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} .floatvidright { float:right; margin-bottom:10px; width:325px; margin-right:10px; clear:left;} Dear Mr. Berko:
In early 2007, we bought a home for $367,000, and after putting down $12,000, we accepted a $361,000 mortgage with payments of $2,400 a month including taxes and insurance. The bank appraised the house at $397,000, and we thought that we were really getting a gift and a bargain. What fools we were! The seller, the broker, the bank, the title company and the appraiser got the bargain. Our home is now worth between $232,000 and $245,000, and the neighborhood has begun to deteriorate during the past year and a half.
I’m a teacher; my pay is ridiculously low, the students don’t give a darn and the administration doesn’t care and insists we give all of them passing grades. So I hate my job. My husband is a certified aircraft mechanic; he lost his job eight months ago but works part time repairing cars. We can barely maintain our home payments, but both our jobs are dead ends, so we want to move to Provo, Utah, where my brother has an avionics business and a good job for my husband. I’m certain I can get a job teaching and make more than I would in Florida. However, we can’t sell our home; the best we’ve been offered is $232,000.
I know we made a mistake to buy the house in 2007, even though our broker insisted that the price would continue to rise. My husband wants to do a short sale, and I’m not sure about this, because it would ruin our credit, and I think it’s morally wrong to welsh on a debt that’s our fault, especially since we have almost no debts. But we want to get out of Florida for a new beginning and better schools for our two children.
We have been reading your column for eight years and think you have a lot of common sense. So we would appreciate your opinion on a short sale, how much it might hurt our credit and how the process works.
D.R., Fort Lauderdale, Fla.
Dear D.R.:
Darn, you sound like wonderful folks and the kind of people I’d enjoy as next-door neighbors. Yes, it’s morally wrong to welsh on a debt, but sometimes there are mitigating circumstances that make welshing necessary and morally absolve you of wrongdoing. The bank, the appraiser, the title company and the broker didn’t feel guilty selling the house to you at that inflated price. And today, they don’t feel a tingle of guilt that the value of that home had a nuclear implosion. They all did what was best for them when you bought the house, and now I believe that you must do what’s best for you. It may be 15 to 20 years (or never) till the value of that house returns to your purchase price.
I strongly encourage you to do a short sale and get out of Dodge. Do it for the sake of your marriage, kids and peace of mind. Florida’s public education system is one of the worst in the nation, and your children’s education will certainly be better in Utah than in Florida by orders of magnitude. And as a teacher in the Provo school system, you’ll earn about 30 percent more, your students won’t be slovenly, malicious or threatening, and your bosses will generally give you the support you need.
I think my enthusiasm is on the money, because a reader who taught grade school in Miami for nine years is now happy as a hog on ice teaching in Utah. Don’t tarry. Do it, and you’ll probably save $1,200 a month renting a home in Provo. Your credit will take a hit, but it can easily be repaired in a couple of years if you play it straight, pay your bills on time and bank your savings to purchase a less expensive home.
I’m not going to describe how a short sale works, because the process is much more involved than the purchase of a home. It is lengthy, and the paperwork can be complicated, so make sure that you counsel with a lawyer and a certified public accountant before you proceed. The lawyer will probably contact the lender and determine the lender’s process for completing the sale. However, some lawyers might smell blood and charge you up the gazoo. If this is the case, then contact a real estate broker. Many specialize in short sales and can be more helpful than some lawyers and certainly a lot less expensive.
If you use a broker, it still makes sense to have a lawyer review all the documentation.
Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, Fla. 33775 or e-mail him at mjberko@yahoo.com. © 2010 Creators.Com
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