[leahnc]

My husband & I bought our first home 3 years ago. We both feel that we got in over our heads. It's a struggle every month to pay our mortgage. Our finances are very tight. We don't live extravagantly & only have the basics. We don't even have a car payment.

The PMI added on our mortgage is 160.00/month. So our mortgage payment is 949.00/mo..

We are expecting baby #2 in May & Im going to have to quit my Mon - Friday job because we can't afford two children in daycare.

We have zero money left at the end of the month after bills & groceries. We can't even pay on any of our existing debt (medical bills, 1 credit card, copays) because there is nothing left & we can't work towards saving money because we have no money.

Another challenge is we can not refinance. Our broker says our credit is not good enough.

My husband's job keeps him busy from 9am to 9pm (so a second job is out of the question)

We need to get $124,000.00 out of our home (wishful thinking) & we were thinking of buying a smaller/older home paying between $69,000.00 - $72,000.00. This would lower our mortgage payment & would allow us to have money at the end of the month to work towards our debt & future goals.

We are concerned about obtaining a new loan because we have managed to mess up our credit in the last 3 years...

I guess Im just not sure what to do? Should we stick it out in our current home & hope things improve, or sell?

[ScottGem]

I would sell. If you try to stick it out and can't keep up the payments you might be faced with bankruptcy or foreclosure. Even though your credit may be down, a mortgage is a secured loan so its easier to get.

However, there is a bigger issue of what you will get. Having purchased 3 years ago, you were in the middle of the boom. You hardly pay any principle during the first few years, so the only equity you have is the down payment you made and any appreciation of the value.

[leahnc]

Thank you ScottGem. We've been dragging our feet for a while.. We are so emotionally attached to our home so this decision has been gut wrenching!

Thanks for the advice!

[ScottGem]

Glad to assist.

One other point I don't think I made clearly. You need to figure out what equity you have. Its possible that you might have none. It could be the balance on the mortgage is more than the current value of the home. If that's the case, then sticking might be a better choice.

[Ace High]

Leah,
Would the house have gained any value in equity by now?? Its location may be key. 3 years is a long time, if the house has gained any in value they may be able to have PMI removed. That would cut some off the monthly mortgage. Just an idea to think about. We recently had our PMI removed and we have only been in the house 3 years ourselves. The value of home ownership is that the property usually appreciates. Also another thing to check into is the interest rate that you have on the current house. If it was a good rate, and you try to sell and buy a smaller house, you may lose the good rate and find yourself paying a heftier rate on the smaller house because your credit history may not be so good. In the end, the rate on the smaller house may not be much of a savings. I would try to find out what the current interest rate would be for your potential next purchase before deciding to sell. Also check with your insurance agent, if you take out a higher deductable you may save on some of the escrow. Don't forget to ask the insurance agent about the coverage you may have on your personal goods in the house, we found our was being covered at 75% of the value of the house. That was a lot of coverage for stuff we've toted around for 30 years. In the end, was able to shave about 1/2 of the insurance down which affected our escrow. Remember they are all out to get as much money out of you as possible and will not give you help unless you ask for it. The agent also should be able to suggest ways to save on any car insurance you may be carrying. Good Luck --- Ace

[Ace High]

"We have zero money left at the end of the month after bills & groceries. We can't even pay on any of our existing debt (medical bills, 1 credit card, copays) because there is nothing left & we can't work towards saving money because we have no money."

This is scary, if you are looking to sell and find a lower place, not paying on these bills
Will not help with your credit rating when it comes to getting a new mortgage. Ace

[fvirgo41]

WEll AceHigh,

You will need your home. You need to stick it out and keep it. There is all kinds of help you can get with our financial situation. Medical assistance with your new additions to your family. The market will be getting better. If you bought three years ago your rate should be good. If you sell now you will lose out. Hold on to your real estate and there are other options for you being at home with your kids. Lots of companies need home bodies to work from home. Look into a reputable firm and get a job from home. I know lots of people that have done so and it work perfect for stay at home moms.

[ScottGem]

WEll AceHigh,

You need to 1) check the dates on notes so you don't respond to old threads; 2) make sure you address your comments to the proper person a 3) make sure your comments are applicable to the thread.