THE ENEMY, PART TWO: THE TOWNHOUSE

I don’t know what I was thinking. I guess I was in the same frame of mind as thousands of other Americans when it comes to homes: buy up to what you can afford and then some. It didn’t help that I had just ended a very complicated, painful relationship and the need to feel secure, to lay solid roots was strong. It also didn’t help that after ending said relationship I spiraled into an abyss of partying, womanizing, and out-of-controlness of epic proportions. At the time, the people I was hanging out with were the materialistic type, always wanting to go to the most exclusive clubs and restaurants so they could order the most expensive drinks and be seen with the richest people around. Gag…

Seriously, what was I thinking buying this behemoth of a townhouse? Four levels, 6 bedrooms, stainless steel appliances, 3,000 square feet etc...Double Gag…

On the other hand, it cost me nothing to buy it. I’m one of those suckers who fully financed the mortgage and had the seller pay all closing costs. I basically paid absolutely nothing to move in and have been paying only the interest ever since. Thankfully, the mortgage rate does not reset for another 8 years but that’s irrelevant; I’ll be gone within a year and a half.

Simplicity Meets the Enemy
If I want to simplify my living arrangements and leave this place for good I have the following options:

1. sell the house outright;

2. rent the place out;

3. sell the house through a short sale;

4. foreclose.

Timeline
The bottom line at this point is that the place is worth less than what I paid for it. I could try and sell it but will definitely lose quite a bit of money, money I just don’t have. In theory, I could also rent the place out, but I’ve done some calculations and I would still have to kick in $17K a year out of pocket just to meet the basic payments. That’s just not possible for someone just happy to live on a limited amount of interest a year starting in 2010.

It is looking more and more likely that what I will need to do it approach the lenders and try a short sale. The way I see it I didn’t really invest anything into the place and so long as the lender realizes that I will not be able to afford payments after I leave my current job, I can just hand the place over without any qualms.

Given that it takes anywhere from 3-7 months to negotiate with the lender and finalize a short sale, I’m thinking that I will get the ball rolling starting in March 2009. Between now and then I’m just going to focus on my other simplifying goals and lay the groundwork for leaving the townhouse. I will talk to real estate agents, lawyers, etc…and see if they can help me figure this out in the best way possible.