relo package running out soon

[Living in Limbo]

We need some objective advice and creative thinking.

We are a married couple both 56 years old. Pam is not working full time outside the home, but just finished five weeks of working part time for the Census.

Tom is an executive with a huge international corporation. In the fall of 2009, Tom was asked to relocate from New England to Atlanta to take a job in another division of the corporation.

As Tom was driving to Atlanta for his move (Pam came two months later), he received a phone call from his new CEO informing him that the company he was relocating for was just put up for sale. Thus begins our tale of "living in limbo".

A generous relocation package is in place until September 2010. It pays for our temporary living expenses in Atlanta while waiting for our New England house to sell. They have extended the payments twice to help us out in the slow real estate market, but they say they will not pay our rent or utilities here after August 2010.

Tom is just one pay grade below the level where the company would buy our New England house outright. We have a guaranteed sale so that, as soon as we accept an offer on the house, the relocation consulting company will take over the sale. Closing costs on the sale of the New England house and a new Atlanta house will be covered by the relocation program, until it ends in September.

We built the New England home six years ago. We owe $375k on two mortgages with Bank of America. The first mortgage is $307k at 5.75%. The HELOC is $68k at 6.375%. We listed the home for sale at $389k and had no interest. We have lowered the price to $365k and still have no action. Tom's employer has agreed to make up $25,000 toward paying off the mortgages. That means we would have to sell the home for $350k to come out even.

The realtor tells us that there is a 16 to 18 month inventory of houses on the market in our price range. The only comparable houses that have recently sold in the area were under $340k for a final sale price. Those few homes have amenities that ours does not, making ours less valuable.

We have been preapproved for a mortgage to buy a home in Atlanta. We have not acted on this, however, due to the great unknowns about whether Tom will have a job with the new owners of the company.

Here is where we need some advice.

Tom thinks we should try to find a renter for the New England house, even if we have to make up $1200 to $1500 a month to pay the mortgages. He thinks we should possibly refinance at a lower interest rate and continue paying the mortgage until the real estate market recovers and we can sell at a better price. Tom thinks Pam should try to find a full time job that will pay the New England mortgage short fall until we can sell the house at a price that will pay off the mortgage. He thinks we should continue renting in Atlanta.

Pam thinks we should drop the price to $325k for a quick sale, making up the $25k difference with a loan from our 401k, taking advantage of the $25k sale price assistance from Tom's employer and the closing cost relo benefit which will amount to $20k. She also thinks they should buy a house in Atlanta, using the second closing cost benefit, before it all ends in September.

Obviously, we do not qualify for a hardship modification. For tax deductions, we really do need a mortgage. Tom does not want to dip into the 401k. Pam does not think it makes sense to walk away from the relocation benefits, because we will have to make up that $65k ourselves at some later date.

Tom's old job in New England is gone and there does not appear to be anything for him back there at his old division. The job market in the northeast is not as good as in Atlanta. Not to mention the weather . . . we would like to stay here. What advice can you give us to help us make a decision on how to stop "living in limbo."

With much gratitude,
Tom and Pam

[Credit Expert]

Hi Tom and Pam,

I am not an expert in this field but I thought I would throw in my 2 cents! My best advice would be to sell the house at whatever you can get because housing values will continue to slump for quite some time. Increase your chances by thinking out of the box. Rent the house to an individual that is willing to show the house anytime, even if the rent is reduced.

Go to a local sign shop and have 100 plastic signs made that say "Open House Must Sell (with your street address and phone #) which you can likely get for under $3 a piece with the metal standing stakes included. Place them all over your neighborhood and the surrounding areas.

If you stand out and get more people to your home, the chances will increase of selling. If you are not able to get full price, you may want to consider a shortsale. Talk to your lender and see what they say.

Hope everything works out for you.


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There is my 2 cents.