My wife and I who are both in our mid-late 20`s have a dilema and we need advice on solving.
We bought our current home in November 2007 and put about $15000 into it, plus accumulated some unwanted debt from just simply having bad luck in the finances, vet bills, splurging too much, etc. We bought this house as a long term home, something that we would fix up, make our own then start a family, we both have good jobs and everything seems golden at the time. Now almost 1yr ago I realize finally after 5yrs that I absolutely hate my job and if I am going to keep my marriage going in the long term I need to change careers and thats when we decided I need to go back to school which means relocating to Toronto from where we currently live which is Kingston. Lots of schools for me to go to in Toronto and my wife could transfer her job, plus have a larger opportunity to move with it being a larger market job wise. It was decided, so we decided to throw a bit more money into the house to get it more sellable since we had not finished everything, this is something my agent said was a good idea, so we did that, put the cost on our ever growing line of credit and finally had the house on the market for Sept 11 this past fall, then you all know what happened the economy went down the crapper, real estate prices although stable in Kingston given the large government employment dropped, we started at $243,900 and now after 7 months and lots of interest in the house, but no bits are down to $223,700, but we owe $215,000 on it. We expected that we would lose money on it and we just worked it into our plans which was to sell and rent for a year to help pay down our debt and loss on the house. Next thing to happen was something I have learn to hate, the "interest differential penalty" on our mortgage, first we expected 3 months interest so $3200, not bad, now with rates down to 3.9% we are looking at a nausiating $14500! Our initial plan to sell and rent are no longer the good option, really we cannot afford that.
So what are we looking at financially?
Well we owe $215000 on the house at 5.79% with 3.5yrs on the term remaining.
We owe $28000 on our line of credit and plan to lose $12000 on the house adding in commission and lawyers fees, thats not counting the mortgage penalty.
We plan to be in Toronto (renting) by August of 2010 and have a manageable debt load given that we will be on 1 income of $45000 and living tight month to month.
We have almost no savings.
So the question is what do we do?
On one hand I can only handle my daily job for so much longer, that in itself is another story, but lets just say I am at the end of my rope mentally and having to endure more will start to ruin my marriage as my wife does not want a life were I hate my job all the time. Some may say to suck it up and just keep working, but I have done that for 5yrs and can`t do it anymore.
On the other hand we need to sell, but it seems that we are between a rock and a hard place, $14500 mortgage penalty and having to pay down $52000 in debt or avoid the mortgage penalty and buying a rental property that we could live in for the time being and rent out the remaining unit(s) and have a lower $42000 in debt to paydown.
So the question is would we be making a wise decision to purchase a rental property? would we likely be digging our hole bigger by doing this?
We would be living and renting in Toronto while owning and managing a rental home in Kingston (2.5hrs away) while I am in school full time, likely having a part time job and only having family back home to maybe help out when I cannot get back to Kingston to deal with it. We will maybe have 1 months worth of expenses to cover our costs should we have a vacancy. We have worries of an unexpected expense to deal with or a tenant that stops paying rent or wrecks the place and then we have that financial burden to deal with.
Any advice would be great, thanks!
We bought our current home in November 2007 and put about $15000 into it, plus accumulated some unwanted debt from just simply having bad luck in the finances, vet bills, splurging too much, etc. We bought this house as a long term home, something that we would fix up, make our own then start a family, we both have good jobs and everything seems golden at the time. Now almost 1yr ago I realize finally after 5yrs that I absolutely hate my job and if I am going to keep my marriage going in the long term I need to change careers and thats when we decided I need to go back to school which means relocating to Toronto from where we currently live which is Kingston. Lots of schools for me to go to in Toronto and my wife could transfer her job, plus have a larger opportunity to move with it being a larger market job wise. It was decided, so we decided to throw a bit more money into the house to get it more sellable since we had not finished everything, this is something my agent said was a good idea, so we did that, put the cost on our ever growing line of credit and finally had the house on the market for Sept 11 this past fall, then you all know what happened the economy went down the crapper, real estate prices although stable in Kingston given the large government employment dropped, we started at $243,900 and now after 7 months and lots of interest in the house, but no bits are down to $223,700, but we owe $215,000 on it. We expected that we would lose money on it and we just worked it into our plans which was to sell and rent for a year to help pay down our debt and loss on the house. Next thing to happen was something I have learn to hate, the "interest differential penalty" on our mortgage, first we expected 3 months interest so $3200, not bad, now with rates down to 3.9% we are looking at a nausiating $14500! Our initial plan to sell and rent are no longer the good option, really we cannot afford that.
So what are we looking at financially?
Well we owe $215000 on the house at 5.79% with 3.5yrs on the term remaining.
We owe $28000 on our line of credit and plan to lose $12000 on the house adding in commission and lawyers fees, thats not counting the mortgage penalty.
We plan to be in Toronto (renting) by August of 2010 and have a manageable debt load given that we will be on 1 income of $45000 and living tight month to month.
We have almost no savings.
So the question is what do we do?
On one hand I can only handle my daily job for so much longer, that in itself is another story, but lets just say I am at the end of my rope mentally and having to endure more will start to ruin my marriage as my wife does not want a life were I hate my job all the time. Some may say to suck it up and just keep working, but I have done that for 5yrs and can`t do it anymore.
On the other hand we need to sell, but it seems that we are between a rock and a hard place, $14500 mortgage penalty and having to pay down $52000 in debt or avoid the mortgage penalty and buying a rental property that we could live in for the time being and rent out the remaining unit(s) and have a lower $42000 in debt to paydown.
So the question is would we be making a wise decision to purchase a rental property? would we likely be digging our hole bigger by doing this?
We would be living and renting in Toronto while owning and managing a rental home in Kingston (2.5hrs away) while I am in school full time, likely having a part time job and only having family back home to maybe help out when I cannot get back to Kingston to deal with it. We will maybe have 1 months worth of expenses to cover our costs should we have a vacancy. We have worries of an unexpected expense to deal with or a tenant that stops paying rent or wrecks the place and then we have that financial burden to deal with.
Any advice would be great, thanks!
