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I currently have a home that is 100% Loan to Value. It has lost a significant amount of the value i paid for it -- hence now a 100% LtV guesstimate.

I am able to comfortably make my payments as it stands, and have no financial hardship.

I'm looking to move out of my house, and back into rented accommodation. This in the medium term, as I'm considering relocation, and if not relocation a big change in my career -- moving back to rented accommodation would make these significantly easier, due to a lower commitment, and lighter cash flow.

As part of my consideration, I'm trying to ring fence my savings both medium and long term.

I have looked at:

  • Straight refinancing: This would cost me somewhere around 5k, and wouldn't reduce my payments, and would incur PMI (lender pays my PMI today)
  • Pouring savings in to get my LTV to a level where I get a better rate. Still incurs a PMI (don't have enough to get to 80% LTV)
  • Lender, and govt modification programs. I don't qualify for these because of no financial hardship. (e.g. I can afford to pay for my mortgage, and my LTV isn't something crazy)

Both of these don't get me out of my home, or change my cashflow -- the end payments are maybe $100/mo better off.

Also, I've looked at:

  • Selling my house. This would wipe out my savings given the guesstimate of 10% for all the various costs of selling. Note, I'm not looking to buy another home.
  • Short-sale: Looking at the requirements for this, I don't qualify.
  • Deed in lieu: Would be my most preferable option, but I don't have any of the qualifications for hardship etc.
  • Renting my property out as a whole. but this would only cost ~55% of the out goings of the home (loan, HOA, property taxes)

Does anyone have any suggestions or advice that I may not have considered? Am I just being selfish, and it's a loan, and it's absolutely my problem that I'm completely unable to sell without taking out my life savings?

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    Selling -> You want to take remove the roof over your head ? Atleast you have something of your own where you can return to at the end of the day. Remeber if you go broke in a rented one you will be on the road.
    – DumbCoder
    Commented Feb 23, 2011 at 10:58
  • @DumbCoder If he goes broke he won't be able to pay his mortgage either and will be foreclosed on.
    – Andy
    Commented Dec 30, 2014 at 1:28

3 Answers 3

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I don't have a short-term solution for you, but I'd suggest that cash is king, especially if you're looking at a major life change in the next couple of years (job change and/or relocating). If you plow a bunch of cash into paying down the mortgage, you lose the flexibility that that cash can buy you a year from now.

Random collection of ideas:

  • You could plan to use extra savings to pay the costs of selling your house so that your savings won't get wiped out when you go to sell at some point.
  • If you change your mind when "medium term" arrives and decide to stay in the house, you can use the extra cash to get to 80% and refi. Risk here is that rates may go up in the mean time.
  • You could put your house up FSBO to reduce your costs. Sounds like you have a little time to be patient while this strategy works.
  • Consider renting part of your house to a boarder/roommate for extra income.
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If you're able to make the payments comfortably, be thankful for that. A lot of people in your situation can't.

If you're looking to get out of owning the home now, it's going to cost you dearly. But I think you know that already.

There are pros and cons of home ownership. Lack of liquidity is a con, and you're finding that out now. For all intents and purposes, you're stuck.

Unless you want to pay through the nose to get out, I'd learn to love your home. Maybe consider paying down the mortgage a little faster so that you can get yourself in a position that you can sell the home in the future.

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I am able to comfortably make my payments as it stands, and have no financial hardship.

Based on this statement I would keep the home at least long enough for some if not all of the value comes back, depending on the area you live in this could be months or years.

I'm considering relocation, and if not relocation a big change in my career

I would wait until one of the things you mention above actually happens before I took a loss on the house. No since in losing money because you might do something.

Finally I would build up some savings to prepare for what you are considering. I would not throw it at the mortgage until I had made my decision on job and location. You can always throw it at the mortgage when you get that figured out.

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