April 16, 2012
Hello Clark. I will try to keep this as short as possible. I am a retired federal employee and worked for the Department of Defense (DoD) as a civilian assigned to the U.S Army, Army Materiel Command (AMC) as an Emergency Essential (EE) logistician specializing in supply and maintenance and deployed to war zones six times during my career (i.e. Somalia, Bosnia, three times to Iraq and once to Afghanistan). I have received numerous awards for my contributions towards equipment readiness during my deployments. Awards came from officers ranging from Majors to General Officers. Needless to say, I am very proud of my accomplishment over my 37 plus years. I am 60 years old, and drawing a monthly take-home pension of $4,650.00 per month…that’s after taxes and health insurance deductions. My wife of 38 years has worked most of her life but hasn’t worked for the past 8 years. She is 56 years old and paid up in the social security system. Thus we are both currently unemployed. We moved to Monument, CO. 4 years ago, which was my final assignment (Ft. Carson, CO) prior to retirement? We both decided to buy our “retirement” home when we moved here with intentions of staying in Colorado. Long story short, both our kids (one married with a daughter who is our only grandchild) live in the Phoenix, AZ area. They have no intentions of leaving as they both have successful careers there. We are a very close family and want to live the remainder of our lives around our kids.
We bought our Colorado home (new) 4 years ago. The home was originally priced at $379,900 but we decided to put $50k in upgrades in it since we thought it would be our retirement home. Thus, we paid $429,900 and put 20% down on the home (i.e. $85,980). Then we sunk another $45k into it with landscaping and window trim. So….we have about $475K invested in our property. About 1.5 years ago we put our home on the market for $440k. We never got an offer. Over the past year and half we continued to lower the price and have had over 70 showings. Our stress level is to the point that we are both taking anxiety medication. It’s driving us crazy! We currently have it listed for $375k. Showings continue but still only a few offers. Over the past 1.5 years we have had a total of 4 offers, all being low-ball (i.e. $20k – $40k less than what we are asking). The biggest dilemma is our yard. The back is either patio or rock with very little room to put grass if the rock/patio were removed. We have a large side yard with grass but due to city ordinance, it can’t be fenced in. Of the seventy showings, at least 80% were of families with small children. Literally all feedback has been positive with regards to condition inside and out (i.e. looks and shows like a new model home) but…..yard is not conducive for children.
We currently owe $340k on our home. The monthly payment is $2,264.58. We pay a flat $2,300.00 per month which includes the payment, interest (rate currently 4.75%), taxes and insurance (PITI). We have talked with our listing real estate agent (REMAX) and he has agreed to 5% commission versus the standard 6%. Long story short, if our home sells for $375k we will walk away with about $5k in our pocket after all selling expenses are paid. Estimates show it will cost between $15k - $20k to have a commercial hauler move us to Arizona. Fortunately I enrolled in the Thrift Savings Plan (TSP) upon its inception with the federal government back in the late 1970’s. Today we have approximately $140k in it. All that being said, we are now asking for your thoughts and opinion on the following;
1. Both our credit scores are between 800- 810. We have worked very hard over the years to get our scores this high.
2. Our total debts excluding our home are (a) one credit card totaling $4500, (b) a medical bill of $5900 due to my wife having knee surgery and I had two back surgeries, all this year (2012) thus we have max’d total out of pocket expenses for the year minus any medication co-payments.
3. A car payment of $423 per month. We pay $450 per month to keep our credit scores up.
We are to the point of considering “walking away” from our Colorado home and giving it back to the bank.
a. How badly will thus hurt us with regards to our credit?
b. IF we "walk" from our home will we be able to qualify with a lender in order to finance a home in Arizona with the understanding we will put 20% down on the home by taking it from our TSP account? And if so, will we able to get a low interest rate (e.g. around 4%)?
c. If we "walk" from our home will we be able to write off a loss on our home (i.e. we paid $429,000 and can’t even get $375k for it? If so, how much loss can we write off our taxes for the year 2012?
d. We can also write off moving expenses which will also help us on tax deductions for calendar year 2012.
Any advice you can provide would be greatly appreciated. As mentioned earlier, we are at the end of our rope with regards to selling our home and desperately need to get to Arizona, whatever the cost.
We are weighing heavily on your opinion and advise. Clark, please help us!
Email: mewalsh50@aol.com (Michael and Emily Walsh)