Help Me Get Out of Mortgage

[cbrsurfr]

If you want to refi, you need to do it before it becomes a rental. Once it becomes a rental the rules change. To refi a rental the loan to value has to be 70% or less (meaning you need more equity in the home), rates are worse by about .375-.500%, and they will usually not let you get a 30 year.

I was in a somewhat similar situation minus the money part. My first house was too close to my crazy father and I needed to put some distance between us. I bought in 2006 and prices of course plummeted. I tried to sell it but would have taken a loss of probably 80K, and might have needed to bring money to closing. I made enough that I was able to get into another house and then turn my first house into a rental. I'm still stuck with it. Values haven't gone up enough, can't refi, etc. I'd love to get rid of it, but that probably won't happen till 2020.

 

[edro]

If you want to refi, you need to do it before it becomes a rental. Once it becomes a rental the rules change. To refi a rental the loan to value has to be 70% or less (meaning you need more equity in the home), rates are worse by about .375-.500%, and they will usually not let you get a 30 year.

I was in a somewhat similar situation minus the money part. My first house was too close to my crazy father and I needed to put some distance between us. I bought in 2006 and prices of course plummeted. I tried to sell it but would have taken a loss of probably 80K, and might have needed to bring money to closing. I made enough that I was able to get into another house and then turn my first house into a rental. I'm still stuck with it. Values haven't gone up enough, can't refi, etc. I'd love to get rid of it, but that probably won't happen till 2020.

Loans for less than $100k are also a problem. They tack on another .3-.5% for that too.

 

[NetWareHead]

If you want to refi, you need to do it before it becomes a rental. Once it becomes a rental the rules change. To refi a rental the loan to value has to be 70% or less (meaning you need more equity in the home), rates are worse by about .375-.500%, and they will usually not let you get a 30 year.

Dependant on the lendor. The home I refi'd was a rental and I even had the lendor factor the rental income when they qualified me for the refi.

 

[z1ggy]

So just did a quick estimate on Refi on my house. Total fees, etc would be $6300. Assumption is going from current loan of $148k @ 4.75%/30 to a 4%/15. Payment would go up to roughly $1600 considering taxes and insurance. I'll have to figure how much principal gets paid each month, and the pay back period later.

Also, an outside realtor took a look at my property. MAde a few suggestions to me but it's going to cost me money. At this point I may need to accept I'm going to be spending money, whether I try to rent it or not.

Would any of you feel it helpful to me if I linked the listing on Zillow, and you give me some feedback on what I could do? Keep in mind, can't break the bank here. I'm willing to do cheap DIY stuff, or maybe something like replacing a sink with a nicer vanity set up.

 

[NetWareHead]

So just did a quick estimate on Refi on my house. Total fees, etc would be $6300.

Hope you get a second or third estimate!

Would any of you feel it helpful to me if I linked the listing on Zillow, and you give me some feedback on what I could do? Keep in mind, can't break the bank here. I'm willing to do cheap DIY stuff, or maybe something like replacing a sink with a nicer vanity set up.

I'll look at it and get my fiance's opinion too (she is a realtor). As a general rule, do things to the house that will appeal to the masses. Neutral paint colors. Biggest RoIs are kitchen and bathrooms. Landscaping and outdoor are probably next

 

[z1ggy]

Talked with my Realtor. Main thing that came out of that was, I need to probably spend some money on the bathroom. I called a contractor and left a message. I'm hoping to pull up the floor, put down tile and slap in a new vanity won't be more than $1200. The bathroom in it's entirety is probably only 60-75 sqft.

 

[NetWareHead]

Talked with my Realtor. Main thing that came out of that was, I need to probably spend some money on the bathroom. I called a contractor and left a message. I'm hoping to pull up the floor, put down tile and slap in a new vanity won't be more than $1200. The bathroom in it's entirety is probably only 60-75 sqft.

Do as much of the work yourself as possible to save money. Especially demolition. Pay the contractor for the skilled part of the labor. Demolition can be fun and nearly anybody with some handy skills can remove a sink vanity and even floor tile. You need a hammer, wrecking bar, maybe a crowbar, eye protection and dust mask. Plus a place to dispose of the materials. You can slowly throw the stuff away in your municipal trash collection over the course of a few weeks rather than renting a dumpster etc...

Source your materials wisely. I have no problems getting sinks, light fixtures and even tile from salvage places. We have habitat for humanity restore up here and they are useful for this purpose.

Electric radiant floor offers a good ROI (its not expensive to purchase) and somethign feasible now that the floor is coming up. Most potential buyers will like that.

 

[z1ggy]

Do as much of the work yourself as possible to save money. Especially demolition. Pay the contractor for the skilled part of the labor. Demolition can be fun and nearly anybody with some handy skills can remove a sink vanity and even floor tile. You need a hammer, wrecking bar, maybe a crowbar, eye protection and dust mask. Plus a place to dispose of the materials. You can slowly throw the stuff away in your municipal trash collection over the course of a few weeks rather than renting a dumpster etc...

Source your materials wisely. I have no problems getting sinks, light fixtures and even tile from salvage places. We have habitat for humanity restore up here and they are useful for this purpose.

Electric radiant floor offers a good ROI (its not expensive to purchase) and somethign feasible now that the floor is coming up. Most potential buyers will like that.

All good things, thank you.

One small issue that kind of plays into this a bit. House on my street with an extra bedroom AND garage is selling for only $10k more than my house. Like I said earlier, assuming a close price of 95% of my list, I'd have to bring $10k to closing. Assuming something like a 50% ROI on a bathroom remodel, I really can't spend more than that $1200 I listed. Radiant floor might break my budget.

Do you all think it would be worth it to remove my standard white tub (with the side that goes all the way to the ceiling) and go for a stand up shower stall with tile? I mean, if I'm going to end up spending ~$1000 to just redo the floor and a new vanity, might I just go all in and make the bathroom the selling point of the house by spending another $1000 or something on that upgrade?

 

[NetWareHead]

Do you all think it would be worth it to remove my standard white tub (with the side that goes all the way to the ceiling) and go for a stand up shower stall with tile? I mean, if I'm going to end up spending ~$1000 to just redo the floor and a new vanity, might I just go all in and make the bathroom the selling point of the house by spending another $1000 or something on that upgrade?

If you remove the tub you lose the full bathroom which is an advertising point of the house. You will end up with a toilet, sink and shower which is a 3/4 bathroom. My opinion is that if the tub looks good, polish it up and keep it. Especially if that is your only bathroom in the house. People with kids are going to want/need a tub to bathe the children. For some reason, even if people dont take frequent baths, the majority of buyers still want a full bath.

 

[z1ggy]

If you remove the tub you lose the full bathroom which is an advertising point of the house. You will end up with a toilet, sink and shower which is a 3/4 bathroom. My opinion is that if the tub looks good, polish it up and keep it. Especially if that is your only bathroom in the house. People with kids are going to want/need a tub to bathe the children. For some reason, even if people dont take frequent baths, the majority of buyers still want a full bath.

Hmmmm okay, didn't think of it like that.

I'm going to take a picture of my bathroom tonight and post it for users to view and give me advice on where to spend money on upgrades. I have some small built-in's directly behind the tub that I feel like are kind of a waste of space assuming my new floating vanity will have some storage. Another idea I had was to remove them or modify them in some way and flip the toilet around and push it back into the corner where they current reside. I feel like that would open up more floor space, giving the room a more open/bigger look.

 

[NetWareHead]

flip the toilet around and push it back into the corner where they current reside. I feel like that would open up more floor space, giving the room a more open/bigger look.

$$$ and you spoke about a $1200 budget earlier. You didnt want to put in radiant floor for cost reasons but now talking about moving a toilet You need to stick to your budget or have a honest admission about what you really want to spend. Moving the toilet puts you into plumbing territory which may need a permit.

 

[z1ggy]

$$$ and you spoke about a $1200 budget earlier. You didnt want to put in radiant floor for cost reasons but now talking about moving a toilet You need to stick to your budget or have a honest admission about what you really want to spend. Moving the toilet puts you into plumbing territory which may need a permit.

D: yeah sounds expensive. Sounds like then it makes most sense to do all new floor and vanity, get the tub cleaned up my lover and span. I will see how much the heated flooring costs but I'll assume for now it will break that ~$1200 budget. If I can get help from my father or a friend, I can do the demo to save some $.

I get to write this off on taxes correct? I also replaced my roof last year because it was leaking... Can I write that off, too?

 

[NetWareHead]

I get to write this off on taxes correct? I also replaced my roof last year because it was leaking... Can I write that off, too?

You need to see an accountant or financial planner and make them understand what you intend to do with this property now and in the future.

Generally, huge repairs like a roof or a bathroom reno usually exceed the typical deduction amount one can take in a tax year. Stuff like this is generally treated as a capital expenditure and depreciated over a 27.5 year schedule. Im not a CPA, accountant etc... but you really need to see one so you can accurately assess your financial picture and determine your profitability.

 

[mizzou]

Hope you get a second or third estimate!

$6300 on a $148k loan borders completely useless territory, especially for less then 1% point on APR

If you can afford the increase in payment to 15 years vs your current mortgage (no clue how much you have left on it, I'm sure it's not 30 years) just pay more each month in principal on top of your current payment. I highly doubt you will save money on interest by spending $6300 to get that lower rate. But if the math says it works, it works!

 

[mizzou]

Ziggy, just based on the conversations in this thread, you are going to need to be really really careful about making investments into something when you basically have no wiggle room left. This might make the situation way more stressful then needed. One mistake with the house thing and it's going to exponentially screw you in to debt.

You could always sell your current car and drive a beater if the money is that bad. I think you need more capital on hand in order to do this right.

 

[Leymenaide]

Renting will give you no peace of mind. Over the last year it took me five visits before a judge to get a Doctor his wife a nurse and his Yale graduate daughter out of my home. They did 40k of damage and still owe 17k in back rent. The renter has all the rights and you have no room for error. They will smell that as well.

 

[HeXen]

Put a For Rent sign in the front yard and post of Craigslist.
Hold an open house and book appointments 30min apart on a single day.
As everyone shows up to view the house, previous appointments drive demand.

Find a lease agreement online and tailor it to your needs.

Establish an LLC ($50? state fee) and transfer the house loan to the LLC (free).
If someone gets hurt and sues you, they can only sue the LLC, so your personal property/money is safe.

No need to pay someone else (or company) to do all of this for you.

Bolded is very important. Always LLC when possible, otherwise it can be devastating. Also agree with Lemonaide, It might take 6 months just to get someone out of your home.

 

[z1ggy]

Ziggy, just based on the conversations in this thread, you are going to need to be really really careful about making investments into something when you basically have no wiggle room left. This might make the situation way more stressful then needed. One mistake with the house thing and it's going to exponentially screw you in to debt.

You could always sell your current car and drive a beater if the money is that bad. I think you need more capital on hand in order to do this right.

I'm aware. The problem is that while I do have a cash limit as far as what I can bring to close/invest with, if the house just isn't appealing, having $1M in the bank to spend won't matter if I don't do anything. All the other houses for sale in my neighborhood have some kind of reno, or are priced lower than me when everything is scaled to be equal (ie, taking into account bedroom #, bathroom #, garage or not etc).

Driving a beater over my 5 year old car isn't going to save me much in the short term. Ideally I'd need to raise maybe $4-5k more on top of my normal income within the next 8-12 weeks, and lowering my car payment by $100 or $200 a month isn't going to do that.

Renting will give you no peace of mind. Over the last year it took me five visits before a judge to get a Doctor his wife a nurse and his Yale graduate daughter out of my home. They did 40k of damage and still owe 17k in back rent. The renter has all the rights and you have no room for error. They will smell that as well.

Yikes. Yeah I feel like cases such as this are rare, but if they happened to me I'd be totally screwed.

 

[slashbinslashbash]

I'm aware. The problem is that while I do have a cash limit as far as what I can bring to close/invest with, if the house just isn't appealing, having $1M in the bank to spend won't matter if I don't do anything. All the other houses for sale in my neighborhood have some kind of reno, or are priced lower than me when everything is scaled to be equal (ie, taking into account bedroom #, bathroom #, garage or not etc).

Driving a beater over my 5 year old car isn't going to save me much in the short term. Ideally I'd need to raise maybe $4-5k more on top of my normal income within the next 8-12 weeks, and lowering my car payment by $100 or $200 a month isn't going to do that.



Yikes. Yeah I feel like cases such as this are rare, but if they happened to me I'd be totally screwed.

IMO there is no reno that you can pay a contractor to do that will give a positive ROI. You can do the bathroom vanity and tile the floor yourself for $500 in materials and that will probably give a positive ROI. Paying a contractor to do it will run you quite a bit more than the $1200 unless you can find a dirt cheap handyman type.

Paint every room -- walls, ceilings, and trim in a contrasting color. Update the bathroom. (Simply painting the old vanity a light color can have a huge effect. We went from 1970's dark fake woodgrain to white cabinets with yellow doors by spending $30 and a couple of hours on painting. They don't look perfect up close, but when you walk in the room it's a night-and-day difference.) Replace flooring where it's really bad. Fix things like junky/old caulking around the tub surround. Update lighting fixtures and light switches/switchplates to white instead of the old beige. These are just about all the things you can do to give a positive ROI on renovations and make the house feel "new" without spending major bucks. I have seen too many people spend $10-20k on a kitchen remodel and then end up not making it back when the house sells.

There is no market in the US where you can have a house priced anywhere in the vicinity of correct and not get an offer in a full year on the market. Even if it's older / requires renovation. Put as much effort into it as you can, take it off the market for a couple of months and then list it again with a different realtor and new pics after you have painted everything.

 

[z1ggy]

^^ I know but I've never done tile work or any plumbing. I've watched HGTV like it's going out of style, but that's not replacement for actual work. If I can find a buddy who's experienced in small reno's like this, I'd gladly do it with him in a day no problem. But as a single guy with family hours away (who really couldn't help anyway) I'm kind of on my own.

As far as the kitchen goes, I am probably going to at least get a quote for a new counter. It's very outdated and is just one of those wood slabs that has a plastic counter glued on. Part of it is actually coming off on the side. And lastly, I am going to go pick up new hardware for all the cabinets to replace the gold brushed stuff with nickel brushed. However, all my door knobs are gold brushed so I'm not sure if I'd have to replace all my door knobs now with nickel brushed to make the house flow properly.

 

[squirrel dog]

In home sales , your house is competing with new house construction . What is your price per sq. foot of living space ? What is the price of new house construction in your area ? If your house has been on the market for 365 days and the national avg. to sell is 89 days , there is a problem with your price , or location , or both .

 

[slashbinslashbash]

^^ I know but I've never done tile work or any plumbing. I've watched HGTV like it's going out of style, but that's not replacement for actual work. If I can find a buddy who's experienced in small reno's like this, I'd gladly do it with him in a day no problem. But as a single guy with family hours away (who really couldn't help anyway) I'm kind of on my own.

"Plumbing" can mean a lot of of things. There is easy plumbing, and there is hard plumbing. Easy plumbing is replacing fixtures like sink faucets. Slightly harder is replacing the valves where the pipes come out of the walls (as I had to do in my home as they were all the old style with the hoses permanently attached, and the hoses didn't reach the new sink fixtures, so...) and replacing a shower/bathtub faucet/knobs/toilet. Then there is "hard" plumbing which means moving pipes around in the walls. I think most homeowners should be able to do the "easy" stuff themselves.

Tile work is actually not that hard either. I kind of built up to it myself, by first doing groutable vinyl tiles, and then later doing actual ceramic tiles. The groutable vinyl tiles are a great deal BTW and a good way to really clean up a bathroom with nasty old linoleum. They require minimal floor preparation, and they can be cut with a box cutter, so getting the complex shapes around the toilet / etc. is really fairly easy. And with the grout, they mimic actual tiles very nicely and a lot of people won't notice the difference.

 

[gururu2]

Please don't start DIYing if you haven't done much before. Practicing on a house you are selling is not the best idea if you are trying to be competitive.
Realtors are free (before the sale). Find a good realtor (go with an experienced company) that can tell you what you need to do and maybe provide some comparable updated homes in the area for pricing. Take their advice and decide then if DIY is feasible. You can tell a lot about a realtor based on the time of day they give you.
Fire them if they don't work out or are not practical for your situation.

 

[z1ggy]

Thanks for the input everybody.

So I got new hardware for all the cabinets, $40 for all brushed nickel knobs. I also painted my living room a light beige to replace the retro looking "sponged" dark brown over cream color. I'll be painting the window sills again this week to make them pop.

Contractor should be stoping over this week to quote me on the bathroom job. I also picked a kitchen counter which is laminate, but I asked for quotes for granite etc just to get a feel for how much that would be. Based on what I saw at Lowes this weekend, the high end stuff is about $40/sqft. Too much for me.

 

[NetWareHead]

Contractor should be stoping over this week to quote me on the bathroom job. I also picked a kitchen counter which is laminate, but I asked for quotes for granite etc just to get a feel for how much that would be. Based on what I saw at Lowes this weekend, the high end stuff is about $40/sqft. Too much for me.

IMO, unless your current kitchen counter is butt ugly or worn and torn, then dont replace it. You are replacing laminate with new laminate. You will net nothing. If the current laminate is agreeable to most folk and looks fine, keep it. Most new buyers love granite or other premium countertop and this would be a true selling point. No real estate agent is going to highlight the presence of laminate countrtop, but if you have granite it will surely be in the listing.

Your best bet is to score a slab of remnant granite which is far cheaper than paying for "new" granite prices. (Dont go to Lowes). Make it a point to visit a few granite suppliers. All of the good ones have tons of remnant behind their warehouse that you can browse. Go there with your measurements