jIMOh
Thinks s/he gets paid by the post
I have a complex question with lots of issues, if you see a way to simplify this or fix an issue, please chime in.
In 2005 we bought a new construction house for a decent amount of money. We foolishly put 5% down and have an 80% first and 15% second mortgage. $2200/mo on first and $400/mo on second. Both are fixed rate mortgages now.
We are under water on the mortgage- by anywhere from 70k (appraised) to 90k (what we would likely sell for).
My wife wants to get rid of the house (more on reasons below). Short sale would damage credit, I am OK with walking away, but need to time that with a job change (below).
I am in middle of changing jobs (and careers) and part of this is going from a salary at mega mega mega corp (we are really big) to a nearly 100% commission based job in financial services industry.
My income short term will take a hit- about 50% drop if I do good, and if I am successful, within 3-5 years I should make much more than I do now, and also be much happier with type of work I am doing (this is why I am changing jobs).
My thought process is we only lose money if we sell, however to recover 70k of equity might take 20 years. If my mortgage payment was less I could save 70k in 5-10 years, so it makes sense to get rid out house.
A credit check will be part of new job for me, and my score is currently 767 and wife's score is about 720. My research shows those scores go down to about 600 (120 point drop) on a short sale.
My thought process is switch jobs, keep credit intact. There is a possibility our income does not drop much, and we can keep making house payments and similar (401k savings...). Meaning don't do any "negative net worth" moves like a short sale until its well known we cannot make house payments with my job change and the economy.
Right now we stopped the IRA contributions so we have more cash on hand to buffer the career change, and our 401ks have a little wiggle room (we contribute higher than the match), but even those will get reduced once I change jobs.
We have about 200k invested now, age 37/36.
My focus is primarily on cutting expenses and being successful with new sales job, where as wife would like to short sell current house, get a place we can afford on her salary alone, while over next 3-5 years my commissions increase and income becomes higher than it is now.
Anyone have opinions on issues like this:
1) should we keep house until its well known we cannot make payments? (right now we have no issue with any household expenses (gross income of 120k combined)
2) when doing career changes (because I did not like job I have now) what steps did anyone here take to minimize financial impact to family? (cut expenses, increase taxable savings...)
3) When hindsight shows a bad financial decision was made (bought house at wrong time with little money down), how would a decision like that get corrected?
In 2005 we bought a new construction house for a decent amount of money. We foolishly put 5% down and have an 80% first and 15% second mortgage. $2200/mo on first and $400/mo on second. Both are fixed rate mortgages now.
We are under water on the mortgage- by anywhere from 70k (appraised) to 90k (what we would likely sell for).
My wife wants to get rid of the house (more on reasons below). Short sale would damage credit, I am OK with walking away, but need to time that with a job change (below).
I am in middle of changing jobs (and careers) and part of this is going from a salary at mega mega mega corp (we are really big) to a nearly 100% commission based job in financial services industry.
My income short term will take a hit- about 50% drop if I do good, and if I am successful, within 3-5 years I should make much more than I do now, and also be much happier with type of work I am doing (this is why I am changing jobs).
My thought process is we only lose money if we sell, however to recover 70k of equity might take 20 years. If my mortgage payment was less I could save 70k in 5-10 years, so it makes sense to get rid out house.
A credit check will be part of new job for me, and my score is currently 767 and wife's score is about 720. My research shows those scores go down to about 600 (120 point drop) on a short sale.
My thought process is switch jobs, keep credit intact. There is a possibility our income does not drop much, and we can keep making house payments and similar (401k savings...). Meaning don't do any "negative net worth" moves like a short sale until its well known we cannot make house payments with my job change and the economy.
Right now we stopped the IRA contributions so we have more cash on hand to buffer the career change, and our 401ks have a little wiggle room (we contribute higher than the match), but even those will get reduced once I change jobs.
We have about 200k invested now, age 37/36.
My focus is primarily on cutting expenses and being successful with new sales job, where as wife would like to short sell current house, get a place we can afford on her salary alone, while over next 3-5 years my commissions increase and income becomes higher than it is now.
Anyone have opinions on issues like this:
1) should we keep house until its well known we cannot make payments? (right now we have no issue with any household expenses (gross income of 120k combined)
2) when doing career changes (because I did not like job I have now) what steps did anyone here take to minimize financial impact to family? (cut expenses, increase taxable savings...)
3) When hindsight shows a bad financial decision was made (bought house at wrong time with little money down), how would a decision like that get corrected?
