refinancing a double to get moved quickly - questions
OhioGuy
rental property, and perhaps what order we should do things if we want to
move in the next few months. (move out to the suburbs in the same area - not
long distance)
We are currently living in a double that we purchased 5 years ago.
Similar homes in the neighborhood have been going for about $65K recently,
but we got it for about $40k because it needed repairs. We got a 10 year
loan, and I pay about $30 more than required each month, for $370 a month.
We currently still owe about $11K on it, and would have it paid off in about
4 years.
However, situations have changed. Not only did my wife find out she was
pregnant with our third child recently, but our other two children are
getting ready to enter school. My oldest son is 5, and I'll be putting him
in a part-time private preschool soon. The schools in our city are fairly
poor - evaluated as a D. We just figured we would be moved out long before
the kids would be getting to school.
Anyway, to make a long story short, we bought this place instead of
something closer to our "dream home" because it seemed like a good long term
choice for income. However, now I need to put my wife's desires for a
larger yard, and our desire for a better school system at the forefront.
She is due in February, so this means that if we are going to get moved,
we should really do it by December, so we have a 4 month time frame.
However, I'm not at all sure how to begin. I'm pretty sure that a bank
wouldn't give us a second mortgage at this point - we make about $40k a
year, and this place is eating most of it up.
I believe that perhaps the smartest thing for us to do would be to
refinance our mortgage for a larger amount, and for 20 or 30 years instead
of the 10 we got. This would both give us $ to replace the furnaces and get
both sides into final rentable condition fast, as well as give us some $ for
moving, and maybe even for down payment.
Complicating things is the fact that my sister has been living on the
other side of the double for nearly 2.5 years. She has been a big help with
the kids, but we haven't been charging her much of anything to live there.
I went over and talked to her about various possibilities, and that if we
refinanced, we would need to get a lot more rent coming in sooner rather
than later. So I mentioned that she might need to move. This is not the
first time I've brought this up - I've mentioned it at least a couple of
times since late last year. Her job would never give her enough $ to pay a
higher rent. I was rather taken aback when she said, rather forcefully, "I
can't afford the higher rents around here. I WON'T be going anywhere for at
least another year." I have also heard her talking a lot recently on the
phone about redecorating her side of the double, so I now am starting to
think that she thinks of it as her place, and for some reason she seems to
think that she has some sort of long term right to stay there.
So as you can see, this is a delicate situation. I'm not sure what the
best way to proceed is on a financial front. Should we approach several
banks and credit unions about refinancing our home for a longer term, to
free up monthly payment $ and to give us some $ to work with right now?
Regarding my sister, she has been renting for about $160 a month - roughly
$250 to $280 less than a 3 bedroom 1,300 square foot would rent for in our
area. However, when she started renting, the place needed a totally redone
kitchen, bathroom, the works. Nobody else would have probably rented there
for much of anything. Now we have a lot more time and money in it. Since
it has been 5 years now since we bought the place, and we are thinking of
moving, we really need to start having the place pay for itself.
We could probably go up to another 12 months without having her side bring
in its full potential, but I'm not sure how best to handle this situation
without it ruining our relationship. Considering her reaction to my idea of
her moving, should we somehow give her notice in writing now - sooner rather
than later? We really appreciate her help with the kids over the last
couple of years, and we value our relationship with her, but I don't want
this to turn into some sort of thing where she acts like we never asked her
to move, and doesn't take it seriously.
If you were in this situation, how would you proceed:
A) with my sister, who says she does not intend to move
any time soon, and has ignored hints over the past
year that she should be looking into other housing
arrangements? (at one point she said something about
taking a roommate if we increased rents, but now says
that isn't likely)
&
B) with the financial situation - how can we do things in the right order,
and the right way, so that we can upgrade to new furnaces, fix the last few
things around here that need fixing, and also get moved by the end of the
year?
Tony Sivori
<big snip>
> So as you can see, this is a delicate situation. I'm not sure what
> the
> best way to proceed is on a financial front. Should we approach several
> banks and credit unions about refinancing our home for a longer term, to
> free up monthly payment $ and to give us some $ to work with right now?
>
> Regarding my sister, she has been renting for about $160 a month -
I thought Louisville had cheap rent, but good luck getting anything for
that price here.
> If you were in this situation, how would you proceed:
>
> A) with my sister, who says she does not intend to move
> any time soon, and has ignored hints over the past
> year that she should be looking into other housing
> arrangements? (at one point she said something about taking a
> roommate if we increased rents, but now says that isn't likely)
No one can answer this but you (or someone with intimate knowledge of your
family circumstances).
Just what do you owe your sister? Did she pay for any of the needed
repairs you mentioned? If not, did she provide free labor for any of said
repairs? If so, she may see herself as having equity in the property, even
if you see it as her only deserved benefit was the cut rate rent.
Or has she done something unrelated for you that left you owing her big?
If none of the above applies, you have to decide if you want to be a
doormat for mooching relatives, or are you willing to be a man and assert
yourself and let the chips fall where they may.
>
> B) with the financial situation - how can we do things in the right
> order, and the right way, so that we can upgrade to new furnaces, fix
> the last few things around here that need fixing, and also get moved by
> the end of the year?
I don't think it is a good idea to go further in debt to fix the place
before you sell. You'll pay dear for the refinance. I suspect that you
could pay for at least one new furnace with the closing costs of
refinancing alone. It might be better to let the new owners pick and
install the new furnaces. You'll have to provide a price allowance for
that and other needed repairs, of course.
Or you could make the needed repairs and avoid refinancing by increasing
your income. You could do that by working lots of overtime, if it is
available, at your current job. If you can't do that, you could get a part
time job.
By the way, aren't you the same poster that recently said you put 30 grand
in some stock? If so, why are you acting like you have no resources for
necessary home maintenance?
--
Tony Sivori
Due to spam, I'm now filtering all Google Groups posters.
Lou
with family or friends - sooner or later something happens that puts a
strain on the relationship. Apparently, you've come to that point. If you
simply must do business with family or friends, do it in a business-like
way - in your case, a written lease.
If you've been accepting services from your sister in lieu of rent, only you
can determine if it's been a worthwhile trade. But if you're going to move
and your sister isn't going to be providing those services as a result, the
"in lieu" part of the arrangement will no longer exist, and the rental
should be adjusted accordingly.
As far as her redecorating the place - you're the landlord. She shouldn't
be doing anything of a permanent nature without your permission.
I think your time line is a little longer than you seem to believe. I'm
sure it would be nice to be all settled in at a new place before your wife's
due date, but the new baby won't be going to school for several years yet,
and the oldest isn't yet set to go to public school - you appear to have a
year or so before schooling becomes a real issue. That leaves only your
desire to move as soon as possible as the determining factor, and you may
have to adjust your desires to accept what's realistically possible.
As what you can do loan-wise, talk to a bank.
If I was in your situation, I'd simply sell the place outright for whatever
I could get in its present condition, and move on. If your sister refuses
to move, rental arrangements will be between her and the new owner. If you
can't sell because she won't budge, you're probably going to need to talk to
a lawyer.
No new material below, included for reference only.
"OhioGuy" <no...@none.net> wrote in message news:g86cf3$t77$1...@aioe.org...
Rod Speed
> I have a question about refinancing a home loan, and about how banks
> view a rental property, and perhaps what order we should do things if
> we want to move in the next few months. (move out to the suburbs in
> the same area - not long distance)
> We are currently living in a double that we purchased 5 years ago.
> Similar homes in the neighborhood have been going for about $65K
> recently, but we got it for about $40k because it needed repairs. We got a 10 year loan, and I pay about $30 more
> than required each month, for $370 a month. We currently still owe about $11K on it, and would have it paid off in
> about 4 years.
Fark, its completely mad to have $30K in BPL in that financial situation.
> However, situations have changed. Not only did my wife find out she was pregnant with our third child recently, but
> our other two children are getting ready to enter school. My oldest son is 5, and I'll be putting him in a part-time
> private preschool soon. The schools in our city are fairly poor - evaluated as a D. We just figured we would be
> moved out long before the kids would be getting to school.
> Anyway, to make a long story short, we bought this place instead of
> something closer to our "dream home" because it seemed like a good
> long term choice for income. However, now I need to put my wife's
> desires for a larger yard, and our desire for a better school system
> at the forefront.
> She is due in February, so this means that if we are going to get
> moved, we should really do it by December, so we have a 4 month time frame. However, I'm not at all sure how to begin.
> I'm pretty sure that a bank wouldn't give us a second mortgage at this point - we make about $40k a year, and this
> place is eating most of it up.
Fark, its completely mad to have $30K in BPL in that financial situation.
Thats going to happen regardless of what you do.
> Considering her reaction to my idea of her moving, should we somehow give her notice in writing now - sooner rather
> than later?
The shit will hit the fan if you do that.
> We really appreciate her help with the kids over the last couple of years, and we value our relationship with her, but
> I don't want this to turn into some sort of thing where she acts like we never asked her to move, and doesn't take it
> seriously.
> If you were in this situation, how would you proceed:
I wouldnt have got into that situation in the first place.
> A) with my sister, who says she does not intend to move
> any time soon, and has ignored hints over the past
> year that she should be looking into other housing
> arrangements? (at one point she said something about
> taking a roommate if we increased rents, but now says
> that isn't likely)
> &
> B) with the financial situation - how can we do things in the right order, and the right way, so that we can upgrade
> to new furnaces, fix the last few things around here that need fixing, and also get moved by the end of the year?
Spend some of that $30K you are taking one hell of
a risk with in BPL and dont keep the rest all in BPL.
Al Bundy
OhioGuy wrote:
> I have a question about refinancing a home loan, and about how banks view a
> rental property, and perhaps what order we should do things if we want to
> move in the next few months. (move out to the suburbs in the same area - not
> long distance)
>
In this and several other posts, you have revealed a tremendous gap in
education and maturity. You have put yourself in a tough situation.
The wife did not just "discover" she was pregnant. She most likely
planned it exactly that way. Your best step in all this is to retrieve
your testicles from the wife's purse immediately and do what you have
to do to extricate yourself from the pending financial doom. Your
sister long ago knew of your weakness and perhaps also that the purse
in question is not even half full.
hchi...@hotmail.com
Gotta agree. Freeloading sister, wife going "oh, by the way..."
Sounds like life's a bitch for OhioGuy.
OhioGuy
>in some stock? If so, why are you >acting like you have no resources for
>necessary home maintenance?
That's an easy one - it's in a Roth IRA. While I can invest the funds in
individual stocks as a value investor, my understanding is that I can't
liberate these funds to help fix the house without paying huge fees.
Am I wrong about that? If I am, I'd much rather tap my own finances than
take out a new loan. I just always thought there were penalties on
penalties for taking roth IRA funds out early.
Tony Sivori
Looks like you'd pay 10% in penalty. There are exceptions, but it doesn't
look to me like they'd apply to you.
http://www.gomestic.com/Personal-Finance/Roth-IRA-Early-Withdrawal-Rules.127832
Al Bundy
"Hear no evil, see no evil, speak no evil." You already have the
picture. It's in your mirror.