Ask Jean: House Poor - Jean Chatzky - Making money make sense
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Ask Jean: House Poor

iStock_000007157769XSmallI am a single mom with a 4 and a 6-year-old. I was left with a $610,000 mortgage to pay. I have $160,000 put aside, that I am now getting into to pay this mortgage. I owe $3,300 a month. I have had the house on the market for 9 months and there are not a whole lot of buyers out there. I am in Steamboat Springs, Colorado, a resort town. My house is in a great location. I am trying to relocate to Austin, Texas. I would like to take the money I have left to put down on a house there, but if I hold on to this house, I will run out of that money and maybe get nothing for this house a year later. I really don’t want to foreclose, because I have excellent credit. What to do? I have my bank looking at it to get a loan and pay off the mortgage and then owe the bank and have a smaller monthly payment, but the only income I have coming in is child support which is enough to pay the bills and etc. – which then they might not even look at it as income. So confused! Really need some help.
– Shannan

Talk to your bank about the possibility of a short sale. Explain that you don’t have the money to continue paying this mortgage long-term and that you’ve had the house on the market but it is not moving. A short sale is when the bank allows you to sell the home for less than you owe the bank. This might allow you to make the most of your fabulous location and get out with at least most of your nestegg in tact. Then, and this is really important, once you move — rent for a little while. You’ll need to be able to show income to get a new mortgage anyway, but what I want to see is you back on your feet, with money coming in and the children in schools that they (and you like). I’ve heard great things about Austin!! I hope you run into Sandra Bullock — and I hope you like it there!

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