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How do I get rid of this turkey?

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8bitmachinegun
Regular Contributor

How do I get rid of this turkey?

I recently relocated to the West Coast to take a job after six months of unemployment. Before I left I put my old house on the market, and eventually found a buyer. Problem is, when he did a home inspection several problems were found and he backed out. My real estate agent guesstimates that my house is worth $20K less than my mortgage. He suggested renting it out.

 

This scares me for several reasons. One is liability - what if something bad happens to somebody (renter, neighbor, etc.) and I'm sued? I have basically zero cash reserves at the moment and my credit is close to maxed out after being unemployed for so long. Another possibility is getting a renter in, and then being forced to make thousands of dollars of repairs - money that I don't have. Or what if something that's currently functioning dies and has to be repaired (20 year old HVAC ugh.)

 

The only good news is that my salary is twice what it was, so I should be able to catch up eventually. If I'm not sued or bankrupted by repairs in the meantime, that is.

 

 

FICO8 - Aug 2020
FICO9 - Aug 2019
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2 REPLIES 2
privacyadvocate69
Contributor

Re: How do I get rid of this turkey?

Offer the bank "deed in lieu" (of foreclosure). Basically, you give the bank the house in exchange for wiping your debt clean (paid in full).

 

This zeros out the mortgage and makes the house someone else's problem.

 

The bank may not go for it, but it never hurts to ask.

Message 2 of 3
MortgageMama
Regular Contributor

Re: How do I get rid of this turkey?

I would recommend you keep the home on the market and try again for a sale as long as you can afford keeping up with the mortgage and your current expenses. There is always more than 1 buyer out there, especially now. Perhaps you could simply break even? Yes, renting it out comes with risks such as you mentioned, if you want to go that route. Most realtors can also bring you rental prospects and should have the resources to pre-screen candidates. I would not recommend you entertain the idea of doing a deed-in-lieu. That will hurt your prospects of buying again for a minimum of 3 years. That derogatory event means that mainstream lenders will not consider doing a mortgage until "X" time has passed. Shortest is 3 years, although there are specialty lenders that can do a mortgage after a shorter waiting period (ugly rates). 

The Federal Savings Bank / Member FDIC / Equal Housing Lender / Lending in all 50 States / 25 Years in the Mortgage Industry
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