Can you offer financial advice?

My husband and I bought a house a year and a half ago (November of 06.) We pretty much maxed ourselves out when we bought it because it had an attached office which we thought would be perfect for our studio/meeting room. Well, no one seems to need/be able to afford a photographer this year and our weddings are down by like 15 weddings than average. So basically, our income has decreased about $15,000. My husband has gotten a second job, but we are still just getting by. We basically pay the bills, eat spaghetti and that's it.

Our predicament is (yes, I know this was stupid, no need to comment) we signed a loan that had a penalty. We have to pay a penalty if we sell our house or re-do our loan within 3 years of the purchase. So we have until November of '09. Would it be stupid to pay the penalty and sell (and possibly lose money because of housing prices?) Or should we stick it out.


Also, when we do sell this house (we are def selling as soon as our penalty us up is not before), we are planning on moving to SC. You know, start fresh. Would it be wise to rent first....or try and buy? Our credit is pretty much crappy now because of our financial situation...would we even be able to get a loan??

10% penalty on a $190,000 home

I would re-read your loan docs. Most likely you have what is called a pre-payment penalty. This applies to people that want to re-finance their loan (we put them in our loan docs too...) I will almost guarantee you that selling your house is not included. The pre payment penalty is in there so that you don't go refinance your house at a cheaper rate with another lender. Seriously, call the bank and re-read your loan docs...I have NEVER seen a provision that doesn't allow one to sell his or her house.

As far as moving to SC, I would rent first...you'll get yt o know the areas that fit your lifestyle. This is hard to do without living there. Agents technically aren't allowed to tell you anything about the demographics etc of the neighborhood. I would rent and get to know people and see what areas you like.

you should consult a real estate agent. they wont charge you just for advice...but they have the most knowledege of what works and what doesnt work

Off the top of my head, selling right now doesn't make sense.

It's going to cost you a $19,000 penalty.

Plus the cost of selling; est at another $19,000

Plus can you sell the house for the purchase price? If not, you'll have to add the difference to the $38,000 cost so far.

On the other side, how much is your mortgage payment? How much can you realistically afford? How much money do you have in bank? $50k?

Unless you simply cannot afford the monthly mortgage or you can turn a profit on the house by selling in the next 6 months, it simply doesn't make sense to use your emergency savings to dump the house...all things equal it makes more sense to use the cash to keep the house another year and then re-evaluate.

Rice and beans. Beans and rice.