In IL - rent or short sale, we can't agree, house more than $100k
I apologize in advance for the length of this post but I think the more information, the better you may understand the situation. Plus it is therapeutic lol.
My husband and I are newlyweds. Before I knew him, in 06/07 he was making $120k and made a very poor decision to buy a $215k town-home with all of the upgrades before he saved up, he figured it would be easy money. Market goes kaput right after he moves in. He's in construction, starts making less money but is still able to pay bills. His mortgage is $204k now, 5 years later. All listed town-homes in our area right now are short sales or foreclosures and going between $65k & $95k. For whatever reason he is having trouble grasping the idea that these short sales and foreclosures bring down the worth of ours and that town-homes are pretty much judged to be the same even if there are minor differences. Like our realtor said, the upgrades will just help it sell faster.
I want to try for a short sale but he is intensely against affecting his credit & I'm scared he will make a bad decision because he is so dead-set on this. Renting to me is way too risky � my mom is in real estate and has nightmarish stories of bad renters that are scamming people right now because they APPEAR good on paper. We could get bad renters that don�t pay, that destroy the place, plus we have the responsibility as landlords, have to cover what rent doesn�t cover, plus we will STILL owe tens of thousands of dollars on the mortgage, even many years from now. We pay $1600 a month (including money for property tax) and estimated rent for our property is $1200/mo which is still below the pure mortgage payment. In 2 years his refinanced ARM rate goes up. He keeps saying "I'll just refinance again" but the bank can say no�. so in a few years the mortgage payment could potentially go up. Realistically we would have to cover about $400 ourselves each month. I�m sure there are many other risks and cons that I don�t know about yet.
I prefer a short sale - credit can rebound but we can't recover from a home losing over $100k in value. My master plan is this: I have an acre of land that will be paid off in 3 years at the latest. I am required build by that time which is why we can�t stay in the town-home. We are going to build a home ourselves (he is a carpenter and has built many homes in the past, family is in the biz), loan would probably be $150-200k which would then become a FIXED RATE permanent mortgage and we would have no problem with this. This can be done on my credit alone. Ideally I would like to short sale, live with some parents for 6 months (not ideal but we�re only 27 and can get back up on our feet), pay off all of our debt plus save a bunch and then live in an apartment until the house is built. To me this is a no-brainer but he won�t get past the part about how his credit will be affected.
I have been in contact with a lawyer in Chicago to get answers to all of my questions. I am writing here because he is out this week and I can't stop thinking about it and worrying. I am not on the home's loan or the title and want to be transparent in this if we go this route. My concerns: we did file our taxes together for 2011 and he is on the title of my land and I don't want his lender (Wells Fargo) to come after my land. For a few years he actually had to work out of state because he was unemployed in Chicago but that was a year ago so I don't know if that could still be a hardship but it drained his savings - he was making less, plus gas driving over 120 miles a day in a truck that has horrid gas mileage, but he needs because of work.
He makes a lot less now than when he bought, but now that we�re married my salary covers the loss that he has had. We still struggle though because we both have car loans (mine�s up in a few months), I have a land loan, we both have credit card debt (I don�t have that much but he does have an uncomfortable amount), I have a school loan, he has a jewelry loan. I have taken over all finances but he was really bad about paying all bills on time and spent a lot of money each month getting things turned back on, catching up on unpaid bills, etc. I�ve recovered us from all of that but savings is minimal and we just seem to be getting by each month. He does have a significant annuity and I hope the bank can�t go after that or my 401k.
It feels like I'm the only one of us that seems to understand the gravity of this situation. I knew all of this from the beginning so it isn't a surprise to me but it is finally taking its toll and I am starting to succumb to the intense stress. Please offer me your insight on the situation. I know the Mortgage Debt Forgiveness act expires soon which has increased the stress ten-fold. I�m starting to just be completely overwhelmed by this.
Thank you for reading all of this, I know it was long but it makes me feel slightly better for about 5 minutes or so lol.