Short Sale vs Rental War

[mellowfamily6]

We owe much more that our home is worth because of the market value decreases. We desperately need to move closer to where our activities and life revolve because we are loosing valuable family time due to the commute, not to mention the nearly $700 in gas every month. We have committed to sending our kids to private Christian school so our finances are extremely tight to where we are in the negative every month if we do anything besides pay the bills. We are also in marriage counseling for a few unrelated issues. All that said, I am of the sincere conviction that being responsible for a rental and adding the stress, both financial and emotional, is not a good decision for us. We would end up supplementing the rent just to meet the mortgage. Did I mention we have 4 kids, 6 and under? My husband wants to rent it out and he doesn't care about any of my reservations. We feel like we are slowly dying with this issue and loosing so much money in the process. We really need peace and very wise advice. Please help us!

[rockyracoon]

What do you think you should do mellow? Selling up is not really an option if you are in negative equity but you have set your mind on moving so the only solution is to rent out the house and then you rent where you want to live. This only really works if you can cover the mortgage with the rent you'll receive and that the rent you pay is not too much more, only you know that, but $700 a month back in your pocket is not to be sniffed at and would give you a bit of a breather I'd imagine. If I was in your shoes, this is probably the solution I'd look at. Of course you could always sell up and get a loan to clear the rest of the mortgage, not ideal.

[pdq1]

A relative of mine in a similar situation found himself in negative equity. He made the payments until the debt overcame him and reluctantly handed in his keys. It was 10 years later the debt collectors came looking for him and a deal was done whereby he repaid a small proportion of the outstanding debt. He thought at the time the debt would be cleared by the insurance company but it turned out the insurance he was forced to take out was for the benefit of the mortgage company not the default of the mortgagee.

[VHG]

You sound as though you are from the USA.

This site is based in the UK so may not be able to give you the best answers (though we do get some US posters on here).

[atalanta]

Before you decide to put a tenant in your home, find out what tax you would have to pay on the rent. It may be so heavy that it makes your situationeven worse. In the UK, such rental income may be taxed at one-third.

[mellowfamily6]

Thank you all for your suggestions. I am from the US, this was the first forum site I came across. I will look into the tax side of things.

[Le Chat]

You also need to bear in mind that if you rent out your house and the tenants' leave at some point, the property may remain empty for some time if new tenants' are not found immediately. So, consider that there may be a time where you have to pay the rent on the house you are living in and the mortgage on the empty house at the same time.

[tisikhale]

Sorry to hear the current state of affairs. This is not an uncommon situation though. I am aware of my friend who was dealing in similar state of affairs. However he was not as much hassled with the circumstances yet his debts were far more than his home value. He got help from short sale experts midasshortsales.com. You have not mentioned the area of your residence. Have you tried any such realtors to ease your problem?