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Financing Situation - Looking for opinions! (Sell condo?)

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Joined: 26 Oct 2009
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Schools: Fuqua Class of 2012
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Financing Situation - Looking for opinions! (Sell condo?) [#permalink] New post 06 Nov 2009, 07:16
Hi guys – I have a bit of a weird situation, but after spending a few weeks on the boards here, I feel if anyone can help give perspective on the situation (other than a fin aid officer, but I don’t really have the access to them I’m looking for just yet) it’s the gmatclubbers. Thanks in advance and apologies for the legnth.

I’m applying for Fall 2010 right now – two apps in and one or two more to go. If I get into any of the schools I applied to I’ll be ecstatic, but my first choice is Duke – I applied EA there a month or so ago. I believe I’m pretty competitive at anywhere I’m looking, albeit not exceptional in terms of work experience (3.5 yrs of public accounting at matriculation) or gmat (700 clubber, but in the lower range). The Duke EA system is the main reason I decided to post early on this topic – if I’m lucky enough to be accepted, I’ll only have a couple of weeks to make some relatively major life decisions.

Although I’d been thinking about an MBA for a while, I didn’t decide to really make a go of it until this season. This past spring, I made an admittedly very shortsighted mistake of getting caught up in the first time homebuyers/historically low mortgage rate rush and bought a steal of a condo. Now looking into programs for next fall, this steal of a condo has become a bit of a problem.

Has anyone dealt with a similar situation before? I put 50k down on a 250k place, then banked the 8k first time homebuyer credit. My mortgage payment/taxes/assoc fees run about $1700 a month all said and done. I believe I could get $1500 a month renting it, the $200 a month being covered by savings over the period I’d be back at school.

Still, at the end of the day I’d be saddled with a roughly 215K mortgage (closing costs, funding fees, etc.) and 125-150K in student loans. I’d have $0 savings over the next couple of years and very little wiggle room. I can’t sell the place without forfeiting the credit, along with paying realtors fees, etc that would leave me with a moderate loss on the place. Plus I plan to return to the same area (NJ about an hour outside NYC – really nice area) after completing my MBA. Overall, it’s a daunting proposition.

I guess what it comes down to is a couple questions and an evaluation of a few possibilities:

Questions:
-Has anyone dealt with a similar situation? How’d you handle it?
-Will a bank/the federal loan program grant me a loan with my mortgage outstanding?

Options:
-Head down, barrel through, keep the place, rent it out, take the loans and pray hard.
-Sell the place, take the loss, take the loans and remove the major risk.
-Put off school for another year, gain some more experience (happy at my job and well compensated), and bump the savings up to 25K or so by 2011. That would leave a lot more wiggle room and hopefully give the housing market a bit of time to solidify again if I did need to sell, which I could then do after the 1st year of my MBA if necessary without losing the homebuyer credit. Still, I know what I want to do with my career, and I’m excited about starting it, especially if I get into a top 10 school.
-Hope I get rejected at all my schools and have my decision made for me, hah.

I realize this has been an absurdly long post. A thousand thanks if you’ve made it through and can reply.
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Re: Financing Situation - Looking for opinions! (Sell condo?) [#permalink] New post 16 Jul 2010, 08:54
Hmm, I guess that by this time you already sorted out the problem.

I did have a situation which involved debt and opportunities (with more debt). I took a conservative approach and waited until I paid the loan back, but the amount was not that big, I could work for a year or a little more to pay it off.

In your situation, I would have waited another year, since it will not hurt but actually have less risks. If you were content at work, I would have sought for a professional mba option. Keep working, keep paying the mortgage, keep the property, rent it out and live in a cheaper place for a couple of years. But I understand that a full time mba may outweigh the professional option. In that case, I would have waited.

Would you share what you did? Just, but wanted to see how you solved the problem, after reading your analysis.
Re: Financing Situation - Looking for opinions! (Sell condo?)   [#permalink] 16 Jul 2010, 08:54
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Financing Situation - Looking for opinions! (Sell condo?)

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