I need some adivice ASAP

[krista]

Hi my boyfriend and i are moving back to Saskatchewan so he can go to school. He bought a duplex about 3 years ago and he is locked in for 5 years. He has 1 1/2 years left on his term. The bank says the penalty is $20,000 if he sold. He bought when the market was high and owes $334,000, his place was assessed at $290,000. We feel that we are going to be stuck here another year and a half due to a contract. We have looked into an assumable mortgage but am not sure what happens with CMHC. He just wants out of the contract even if no money is made. Can anyone help with some info as to what to do. He needs to go to school and this is the only thing that is holding him back. His mortgage payment is $1994/month with the property taxes included. He is asking for some money down for an assumable mortgage but because the back yard is only partially landscaped he is flexible.

Please help as our time is running short we are supposed to move this summer.

Thank you!

Krista

 

[Thomas Beyer]

you chose to move .. this is not a requirement. It is a choice.

Choices in life mean consequences .. sometimes positive .. and sometimes negative !

Options:
a) talk to a realtor .. get a value estimate ! Perhaps you can sell for $1 + mortgage assumption ..

b) do a rent-to-own or

c) rent the place, or

d) walk away and be stuck with a bad credit report for years, and possibly a judgement by the courts on money owed to CMHC/bank, or

e) don`t move .. stay where you are and go to school there !

A house and a relationship require a BIG commitment .. is he (or you) up for it ?

 

[PaulPoulsen]

Hi Krista,

Where is your duplex located?

 

[krista]

QUOTE (PaulPoulsen @ May 18 2010, 07:48 PM) Hi Krista,

Where is your duplex located?

it is in the west end. Parkland

 

[krista]

QUOTE (ThomasBeyer @ May 18 2010, 07:01 PM) you chose to move .. thi sis not a requirement. It is a choice.

Choices in life mean consequences .. sometimes positive .. and sometimes negative !

Options:
a) talk to a realtor .. get a value estimate ! Perhaps you can sell for $1 + mortgage assumption ..

b) do a rent-to-own or

c) rent the place, or

d) walk away and be stuck with a bad credit report for years, or

e) don;t move .. stay where you are and go to school there !

A house and a relationship require a BIG commitment .. is he (or you) up for it ?

What is the difference between an assumable mortgage and rent to own?

 

[Thomas Beyer]

QUOTE (krista @ May 18 2010, 08:06 PM) What is the difference between an assumable mortgage and rent to own?
rent-to-own is renting the house with an option to buy it, with a portion of the rent to be credited towards future purchases .. thus you remain an owner until tenant exercises his option to buy.

This strategy would allow you to collect more money from tenant to cover your mortgage and avoid mortgage penalty. However it takes some skills and time to execute, find tenant-buyer and qualify him/her and get the right legal paperwork

An assumable mortgage is a mortgage that gets assumed by the buyer when property is sold

 

[RedlineBrett]

QUOTE (krista @ May 18 2010, 06:20 PM) Hi my boyfriend and i are moving back to Saskatchewan so he can go to school. He bought a duplex about 3 years ago and he is locked in for 5 years. He has 1 1/2 years left on his term. The bank says the penalty is $20,000 if he sold. He bought when the market was high and owes $334,000, his place was assessed at $290,000. We feel that we are going to be stuck here another year and a half due to a contract. We have looked into an assumable mortgage but am not sure what happens with CMHC. He just wants out of the contract even if no money is made. Can anyone help with some info as to what to do. He needs to go to school and this is the only thing that is holding him back. His mortgage payment is $1994/month with the property taxes included. He is asking for some money down for an assumable mortgage but because the back yard is only partially landscaped he is flexible.

Please help as our time is running short we are supposed to move this summer.

Thank you!

Krista

If you need to cash out for 355k (335k balance + 20k payout penalty) and your appraised value is only 290k selling isn`t really an option unless you can (and want) to bring a cheque for 65k with you to closing. That`s what your BF stands to lose if he sold today. PLUS whatever he had put down when he bought it....

$65k is A LOT of money. were I in your position (and I am for one of my properties I`d like to sell) I would rent the thing out for negative cash flow for a couple years while you wait for the market to return to a point where selling is an easier pill to swallow. Even if you`re losing $1000/month on it you could hold for 5 years before you were in the hole for 65k.

But bleeding cash every month doesn`t sound too appealing either I`m sure.

Surely it would be cheaper to go to school where you live... I think you need to plan to stay where you are for a couple years to be honest!