Tuesday, August 16, 2011

What to do with the house?

This is part of a series responding to Christine at Almost Fearless' series 30 Ways in 30 Days to Redesign Your Life and Travel the World. 

Day 8

I guess I kind of touched on this in my last post, but this part of the series was about how to sell your house in a downturn.

The original post was written in 2009. I bought my condo in 2008, and the only thing the housing market has done since then is drop like a rock. While the idea of offloading my condo and never having to deal with it again is appealing, if I sold my condo right now I would end up taking out a loan for the difference between the mortgage and the selling price. There are two other units in my condo complex for sale, and their asking prices are far lower than my mortgage.

So that means I am going to have to become a landlord.

I kind of already am, as I rent out the two spare room in my condo to students. I have learned from experience that there is a big difference between graduate students and undergraduate seniors. I have also learned that I am definitely going to be hiring a property management company and requiring co-signers when appropriate.

One thing Christine mentions in the homework section is this:
3. If you need to reach out for financial help, do it now.

I have considered refinancing in order to make it more likely that renting out the condo will pay for all of the associated expenses of keeping it. Since I have not had the mortgage for a long time, interest rates are low, and my income has increased since I took out the loan, it seems like a good idea.

But I still hesitate. If I had enough cash to pay down a point I would do it in a heartbeat, but I won't have that for a few months, and even if I did there's the question of whether I should be putting that amount towards going to Japan or not. PMI insurance rates doubled about a year ago - I may not see any real savings without paying down a point.

I'm going to have to do some research on refinancing before I put the house up for rent. I should probably start seriously looking at it in mid-2012, after I have enough saved to seriously consider paying down points or not.

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