Under water on house- Is forclosure an option?
Hello, I'm looking for some advise on what to do. In 2006 my wife and I purchased our first home in Lansing, MI. Honestly, I believe we overpaid unfortunately, and it cost us $107,000. We had an FHA loan with no down payment.
Enter 2008, the economy tanked and particularly in the state of MI work was non-existent. My wife and I found jobs in Phoenix, AZ and moved out of state. The home directly next to us sold that year for $4,500 (nope, not missing any zeroes, gotta love Michigan), so needless to say we opted to rent our house out and hope that some day the economy picks back up.
Since that time everything that could possibly need to be done on the house the renters have complained about and we have had to fix. The rent we receive for the home is $80 shy of our mortgage, so as it is we are losing money every month. in the last couple years we have had to scrape together over $6,000 for a new front porch, $1,500 for a new water heater, hundreds for a new window that allegedly broke during an earthquake, a new washer. a new sink and so much more. I am now being told by the property manager I will need to put a new roof on the home and something will need to be done about the leaky basement that is causing mold. It would cost us thousands to make the repairs.
We have tapped out our savings on this home, and it is currently worth around $60,000 while we still owe $90,000 (and even that would be assuming we put a new roof on and figured out what to do about the basement). We have no money left to make the repairs. Last I looked my credit score was around 815, with my wife's around the same. As much as it pains me to ruin our credit, something has got to give at this point and it is either this home that we don't even want or our current home in AZ.
At this stage I would love to just walk away from the disaster that is that home, but I have seen that in MI the lender can come after you for the lost funds even in the case of a short sale. I would hate to destroy our credit, then have my wages garnished and end up in a situation where I can't afford my AZ house either.
I am just looking for advice on where to go from here. Speak with the lender? Get a mortgage attorney? Stop making payments?
Any advice would be greatly appreciated. We are doing well in our current home and state, but that bad purchase in MI will be haunting us for the rest of our lives!