First welcome to the forums pfwa47! And congrats on your little one!
Being that we just had a baby I can totally relate to what you’re going through. Our family lives in a more dangerous part of the city but we pay significantly less rent. Our particular apartment complex is great for kids as it is next to a school and a police station. We have been considering the same thing. Moving and buying a home or continuing where we are. That said…
My husband and I make pretty good money (about $135K/year, combined), have secure jobs, are pretty frugal, and are doing a lot of the right things: saving up a good amount for retirement, saving for a house down payment, and saving for anticipated upcoming expenses in targeted accounts. (He's 35, I'm 29).
More on this on a 2nd post.
Here's the problem. We currently live in a townhouse that my husband bought well before he met me. In a perfect world, he never would have bought this house, but in the real world, we're here and he's on the hook for the mortgage. The mortgage is $131K and the house is worth about $100K or so, so we’re well underwater.
135k / year to me seems like a lot of money considering you only owe $131k. From you’re post I take it you do not have car payments? What does your budget look like? Have you trimmed it down recently?
From your original post here’s what I can gather…
*Savings for new Home: $20,000
*Other savings? (Baby? Purchases?)
*50K - Student Loan.
*Townhouse Mortgage: 131k
Yes, the unfortunate housing market bubble bust has made this an issue for many people. We had the opportunity to buy a house around 2006/2007 and passed up on it. Some of our close friends did purchase a home around that time and now they are upside down on a house mortgage as well. It's a difficult situation.
The townhouse is in a bad neighborhood (although the development itself is pleasant enough), you can’t walk anywhere, and basically I don’t leave the house except to run errands or commute to and from work. It’s terrible. It’s also a hell of a commute for me to get to work.
Needless to say, with our neighbor and his crew of dealers, I no longer feel safe here, especially considering we’ve got the baby on the way. So the calculus has changed somewhat, and I just don’t know what to do next.
Sounds like moving into an inexpensive apartment for a time might be a good solution.
My husband supports my desire to get out of this neighborhood and into a safer house, but wants to make sure we think through all our options.
What price do I put on my family’s safety and well-being, versus our future financial stability?
It is important for both of you to be on the same page with this. Are you planning on taking a few months off of work? If so the environment you raise your little one is something definitely to consider. Stressed out Mommy = stressed out Baby.
I think an apartment in a safe neighborhood might be worth it. Maybe even something closer to work to reduce stress/commute time & expenses? Then rent out your townhouse?
bill o wrote:
Is your condo (and mortgage) entirely in your husband's name? How is your credit score? How much home could you qualify for entirely on your own (your credit / your income / your assets)?
I think you know why I'm getting at.
While this is a solution this doesn’t seem like a very good moral decision in my opinion. Of course opinion’s are like belly buttons… Pretty much everyone has one.
Bichon Frise wrote:
I am one to believe that a "strategic" default is morally wrong. Of course, morals vary from person to person. $135k/yr income and you can’t handle $131k mortgage? At least move to a decent apartment where you feel safe and play the landlord game. Life comes with no guarantees, so do what you must. Know, sometimes we are lucky and sometimes we aren't.
I agree that in my opinion as well a “strategic” default is morally wrong. A decision was made. Abandoning the townhouse seems irresponsible to me.
Bichon Frise wrote:
BTW, with ~$35k in the bank cash would make bankruptcy proceedings awkward to say the least. Have you spoken with an attorney about what you propose?
Yeah, 35k (or more?) in the bank… Awkward. A lawyer is a good idea.