Weigh in on a reader's housing dilemma
Pete writes in with a too-common housing dilemma:
Our household income has been hammered by 50% during the recession due to job loss/changes. We no longer can afford our mortgage and have our house up for sale. Obviously it has been sitting but is priced right according to our agent (reduced twice). If we sell at current listing we will be lucky to walk away with 10 – 20K proceeds. This represents a loss of $170k in down-payment and equity. HUGE loss!
Our 401k is now the means by which we are able to keep our mortgage current while waiting to sell. Our fear is we will burn up all savings trying to maintain credit. Should we stop using 401K money to make payment and let our credit go – but preserve what little savings we have left or chew up savings to maintain credit rating? There is a real possibility of using up all savings and still having credit ruined by going late/or default on mortgage in 2012.
What would you do?
If you've been in a similar situation, what did you do -- and did you regret it?