My fiancé owns a home that is worth approx $30,000 less than he owes on it, and it is in need of some major repairs such as a new roof and some electrical and cement work. We are getting married in 7 months and the home is currently too small for us to live in. I rent an apartment on a month to month lease. I have 2 children (boy and girl) and his home is an 800sq ft 2 bedroom home. We can afford a much larger home when we move in together, but currently the cost of having 2 homes is putting our finances to the limits.

The Problem:
1. We can’t afford to pay the $30,000 it will cost to sell his house.
2. We can’t move into his home.
3. We would rather not go into foreclosure just to get rid of his house.
4. The bank refuses to even speak to us unless we are currently in foreclosure.

We need suggestions on what to do and who to speak to. We are hearing many different things, like

“If you short sale your property, you’ll be responsible for taxes”
“You’ll be responsible for the difference on a foreclosure”
“You can only get a ‘deed-in-leu’ if you can prove you can’t afford the payments”

I’m wondering things like,

“If I’m responsible for the difference, how do I have to pay it? One lump sum? Payments?”
“Do I have to pay the taxes before April 15th? What if I don’t have the money?”



Thanks for any help or suggestions you might have.

So are you saying that he owes $60K on a $30K house?

It sounds like you get the basic idea of what will happen with a foreclosure. At this point, is there any amount of repairs that could be done to the house that would bring it up in value to the amount of the loan? What is the monthly payment, and could the house be rented for that much each month with/without repairs?

I, personally, agree with you that foreclosure is not the way to go. I would probably try to do a combination of:
-pay down the mortgage more than just the monthly payments
-make repairs to the house
-suck it up and live there, at least for a year or two, to have the $$ to do the first 2 things

You say you "can't" live there... is there some reason other than how totally cramped it would be? I realize it would be a major sacrifice, but from what you've said I think it's the likliest way to avoid the foreclosure route.

Good luck!
Karla in TX (I've lived in more than my share of dumps and cracker boxes, as we've acquired rental property over the years!)

Thanks for the advice.

Unfortunately the reason we “can't” live there is because my kids are 10 and 12, a boy and a girl, and no possible way they could share a room :P The only other rooms in the house is the living room. (no dinning room) and a kitchen (and NOT an eat in kitchen). I've put a small table in the living room so we can sit to eat, but that only leaves room for a small loveseat and the TV in the living area. It's fine for right now, but not really something we can work with.

I've already made all the repairs I can do myself. (I remodeled the kitchen mostly with paint, when I walked in it had orange counters and a green sink. The house has been painted, the floors stripped and sealed, new light fixtures, and anything else I could do myself.) All other repairs will require a professional, and probably permits.

My apartment had more room than his house, but if we move in there, we still need to do something with his house. (and he has a dog and my appt doesn't allow pets).

We make enough money that we could probably roll the $30,000 into the next mortgage, but I don't think your allowed to do that when moving to a new house. I mean it's not exactly an equity loan. So I'm just searching for as many options as I can get other than living in 2 houses until the market returns or the loan gets paid down.