I'm going to try for the short version.
In 2005 we bought our first house. We were 25, newly married, and wanted to start a family. We needed a nest before we had babies. We bought the cheapest house to sell in our town in months, a 2 bedroom ranch that we absolutely loved. I was 25, self employed, yet able to qualify for a nearly $300K loan (first red flag!). The bank couldn't understand why I didn't want to borrow more (second red flag!). Since my husband didn't have a long credit history, I was the only one of us one the loan. This would end up being our saving grace. Our mortgage payments were high, but we were assured that we would be able to refinance to a lower, fixed rate within a year. Should we have just rented? Maybe. Should we have waited until the market went down? To that I say, Who knew it was going to go down? Hindsight is 20/20.
Fast forward 3 years. Our house was worth $100K less than we paid for it. Our adjustable rate mortgage was set to re-adjust with no chance of refinance in sight. With the tanking economy had gone not only the equity in our home, but 2/3 of my freelance work, and my teacher husband was facing furloughs. We were still paying our outrageous mortgage, but after 3 years of simply maintaining, it was clear that we soon would be in trouble.
This was about the point where I stopped blogging. I realized that I needed to do something to save my family from what would ultimately be our financial ruin. I looked at our hand. What cards did we have? How would we play them? I started researching for hours a day. We agreed that a short sale was our best option. If we were able to short sell our house, with no missed payments (practically impossible), there was a small, itsy bitsy chance that my husband might be able to qualify for a loan after all was said and done. It was a long shot, but it really was our only hope. The Obi Wan Kenobi to our Princess Leia.
We hired the best short sale real estate agent in Sacramento. I spent hours on the phone with the bank, oftentimes followed up with more hours of research to see what to expect next. I haunted real estate forums. I Googled and Bing-ed until my eyes hurt. It was easily the most stressful period of my life. Banks are NOT your friends. Our bank (which rhymes with mace) is staffed by life sucking zombies from hell. We were current on our payments throughout the whole process, yet made to feel like schmucks for even trying to sell our house. They were beyond terrible at every turn. You know that "I love my bank" commercial? I hate my bank.
We listed our house in July, got an offer a week later, and closed escrow November 24th. It sold for $110,000 less than we paid for it. After childbirth, that day ranks as the biggest accomplishment of my life.
The end result? We now have an offer on a new house, are in escrow, and close in early March. It's one block away from our old house. Our new mortgage payment will be approximately 1/3 of what we were previously paying, for a house that's twice as big.
I know that not everyone in this situation is as lucky as we were. It took hours and hours of hard work, research, pleading, patience, and dedication. Not everyone starts out with the same set of circumstances. BUT, if you are in a tight spot, please know that there are options. Do your research. Don't think you have to stop paying your mortgage. And feel free to ask me any questions. I am by no means an expert, but I learned a thing or two throughout the process.
And now that the dust has settled, my family is soon to be in a new home, and life is calm again, I can BLOG!
