Disclaimer: I am not a lawyer. I am
only publishing my interpretation of my situation. You should seek your
own legal representation for your own particular
situation. Do not rely on my
opinions or statements for your own purposes as state
and local law varies as do individual circumstances.
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My house, which went back in foreclosure, is now listed
for sale at $425,000 - less than half what I originally paid for
the house (see
the listing here). At $425,000 as a bank-owned foreclosure,
I could easily afford the new monthly payments with my current
job. This started me thinking about making an offer to the bank
about taking back the house at this new price. If you find
yourself in a similar situation, you might consider this option
as well; but let me discuss some of the pros and cons first.
Yes, the new monthly
payment would now be low enough for me to make the payments
easily with my current income. When you look at your situation
though, I would probably not even consider taking back the house
if I could just barely make the new monthly payments. I would
suggest that you only continue pursuing this idea about making
an offer to take back the house if you can
easily afford the new monthly payments.
There are more things to think about though so let's consider
the next point.
Insurance on the property
is an important consideration. Insurance, which is largely based
on the construction (which would not have changed) and the price
(which has changed) is very expensive for where I live.
Insurance was one of the things that led me to give up the house
in the first place. Get a quote on your new insurance cost for
the property as it is listed currently. Do you have enough money
to pay the new premium? Easily or just barely?
Property taxes should be
considered as well. Plus, you have to consider the coming year's
property taxes as well as the current year's property taxes and
also any prior unpaid property taxes. That can amount to a LOT
of money. For instance, on my house, I did not pay last year's
property taxes. That amount was about $9,000. Since I did not
pay it, the county will add to that amount interest and
penalties. The new owner will have to assume these expenses -
either them or the bank. For me, property taxes would prevent me
from making an offer to the bank to take back the property.
Still, you should not assume you will be responsible for paying
the property taxes. Ask the bank. Ask the county. Better yet,
ask your lawyer to find out for you and get it in writing. That
is probably the best approach.
Also, look back at all of
your other expenses associated with the house. These might
include your utilities (electricity, water, garbage, sewer, gas,
cable, phone, etc.) and pest control and lawn maintenance. These
are the big items, but there might be others like association
dues. My old house, for instance, has an annual homeowner's
association assessment against it (of which, I did not pay last
year's). Get your attorney and/or real estate agent to also
check for any other liens against the property for which you
might be held responsible.
Aside from the money,
consider why you want to move back into the house? Is it purely
an emotional attachment? If so, recognize this and carefully
weigh how much this should effect your decision. You might be
perfectly happy where you are living now. If so, there might be
very little reason to move back into your old house or even
bother contacting the bank about this new proposition.
I am not saying that the
cons far out weigh the pros in every situation. Your situation
may be completely different than my situation, but please
consider all of these things before you jump back into a
mortgage.
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