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What would you advise him??
I have a CPA friend that purchased a home in 2007. Asking price was $1,150,000 ...he bought it for $1,000,000 even... a bargain ...putting $200,00 down and taking a first mtg. for $800,000. His PI payments are $5,700 monthly.
Long story short ....his CPA business went under last year and he now is part of another CPA firm.
Problem******
He can no longer make the $5,700 monthly payment and asked the bank for a mod. Bank came back with a new monthly of $6,400 and a $30,000 balloon payment in 1 year. Makes NO sense at all. If you cannot pay the $5,700 how can you make a larger payment?
His home is now worth $450,000..... loan $800,000 ....So his $200,000 down is gone and he may not live long enough to see his house go back to the $1,000,000 value.
He has $50,000 cash reserves and NOW here comes the BIG question:
A friend of his lives down the street in almost the identical home...which he will sell him for $450,000 and hold the mortgage himself with $50,000 down.
He has 2 teenagers and college bills coming up + the other expenses that come with the teens.
QUESTION......how would you advise him???
1. Stay in his present house until foreclosure?
2. Buy the neighbors home with the $50,000 and reduce his payments to less than 1/2 which he can afford.? and default on his home?
Here we have morality verses practicality ...... Which would YOU choose and how would you advise him?
3. If he chooses to buy the neighbors home..........should he TAKE some of the improvements with him to the new house? :huh2:
I have a CPA friend that purchased a home in 2007. Asking price was $1,150,000 ...he bought it for $1,000,000 even... a bargain ...putting $200,00 down and taking a first mtg. for $800,000. His PI payments are $5,700 monthly.
Long story short ....his CPA business went under last year and he now is part of another CPA firm.
Problem******
He can no longer make the $5,700 monthly payment and asked the bank for a mod. Bank came back with a new monthly of $6,400 and a $30,000 balloon payment in 1 year. Makes NO sense at all. If you cannot pay the $5,700 how can you make a larger payment?
His home is now worth $450,000..... loan $800,000 ....So his $200,000 down is gone and he may not live long enough to see his house go back to the $1,000,000 value.
He has $50,000 cash reserves and NOW here comes the BIG question:
A friend of his lives down the street in almost the identical home...which he will sell him for $450,000 and hold the mortgage himself with $50,000 down.
He has 2 teenagers and college bills coming up + the other expenses that come with the teens.
QUESTION......how would you advise him???
1. Stay in his present house until foreclosure?
2. Buy the neighbors home with the $50,000 and reduce his payments to less than 1/2 which he can afford.? and default on his home?
Here we have morality verses practicality ...... Which would YOU choose and how would you advise him?
3. If he chooses to buy the neighbors home..........should he TAKE some of the improvements with him to the new house? :huh2:
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