if i have a lot of equity in my home, and i lose my job and can't pay my mortgage...

[BlahBlahYouToo]

and a short sale is not an option, i would go into foreclosure right?
what happens to my equity?

for arguments sake:
i have $100k in a condo purchased for $350k that hasn't really dropped in value.

 

[boomhower]

Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

 

[MrChad]

Do you understand what a short sale is? If your home hasn't dropped in value, why couldn't you just sell it? If it hasn't dropped in value and you have $100k in equity, you'd still probably come away with some money.

 

[dullard]

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

Exactly. Say you sold this condo that is worth $350k for $350k. Then, from that $350k, you pay the $250k you owe to the bank + whatever payments you have missed recently + $20k to the realtor. Then you walk away with just under $80k in your hand. You rent an apartment and live off that $80k until you get a job. If you scrimp, that should last you 3 to 4 years.

This is WHY banks for years required downpayments. Because then people who get into trouble can just sell and be out of trouble. Everyone wins.

 

[ViviTheMage]

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

 

[GasX]

Let's make up some numbers.

$500,000 price

You bought it with a 20% down payment and therefore have a $400,000 mortage (and $100,000 in equity).

Since you bought it, you have made some improvements, the market has gone WAYYYYY up and come back down again.

Let's say your house is now worth $550,000, so you have $150,000 in equity.

If the bank forecloses, I do believe you are SOL on all of it. IF you are unable to make your mortgage payments you are far better off selling the house and getting your $150,000 out of the house than letting the bank take it. If you had to, you could price it low for a quicker sale.

 

[BlahBlahYouToo]

Originally posted by: ViviTheMage

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

yeah, i don't want to lose my $.
so i'm basically i either sell at a loss or lose it all to the bank.

 

[BlahBlahYouToo]

Originally posted by: MrChad
Do you understand what a short sale is? If your home hasn't dropped in value, why couldn't you just sell it? If it hasn't dropped in value and you have $100k in equity, you'd still probably come away with some money.

because there are few buyers at this time, and it will be hard to sell for what i bought it at.
so basically it comes down to how much i will lose.

 

[BurnItDwn]

Originally posted by: BlahBlahYouToo

Originally posted by: ViviTheMage

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

yeah, i don't want to lose my $.
so i'm basically i either sell at a loss or lose it all to the bank.

Yes, unless you find an alternate source of income and make your payments.

 

[Auggie]

well you said in the OP that the property "hadn't lost its value"

if there's no demand for your condo (or anybody else's nearby) that's a surefire sign that your property has lost some value.

you can always try 325k. check to see how much properties around you are selling for before you panic.

 

[Rumpltzer]

Originally posted by: BlahBlahYouToo

Originally posted by: ViviTheMage

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

yeah, i don't want to lose my $.
so i'm basically i either sell at a loss or lose it all to the bank.

Which of these two alternatives would you prefer.

Good luck man.

 

[D1gger]

Originally posted by: BlahBlahYouToo

Originally posted by: MrChad
Do you understand what a short sale is? If your home hasn't dropped in value, why couldn't you just sell it? If it hasn't dropped in value and you have $100k in equity, you'd still probably come away with some money.

because there are few buyers at this time, and it will be hard to sell for what i bought it at.
so basically it comes down to how much i will lose.

That is inconsistent with your original scenario:

for arguments sake: i have $100k in a condo purchased for $350k that hasn't really dropped in value.

If the condo hasn't really dropped in value, that implies that the market price is ~$350k and the definition of market value is the price that it will sell at on the open market in a reasonable amount of time.

So, do you want to rephrase your scenario?

 

[dullard]

Originally posted by: BlahBlahYouToo
i have $100k in a condo purchased for $350k that hasn't really dropped in value.

Originally posted by: BlahBlahYouToo
because there are few buyers at this time, and it will be hard to sell for what i bought it at.

Your two statements contradict. If it is still worth $350k, then it would be easy to sell at $350k. If you can't sell it quickly and easilly at $350k, then it isn't worth $350k.

You are stuck in the same delusions that got many homeowners into trouble. You can't just keep saying it is worth X amount of money when it is worth less than X.

[*]Suppose you can sell it quickly at $325k. In that case, you get $56k back after realtor costs.
[*]Suppose you think it is worth $350 when it is really worth $325, you don't sell, and you rack up thousands of dollars of missed payments. The bank seizes the property and they sell it at $250k just to cover their costs. In that case, you get nothing, zero, zilch, well except you get a foreclosure on your credit report.

Pick your poison.

 

[BlahBlahYouToo]

Originally posted by: Auggie
well you said in the OP that the property "hadn't lost its value"

if there's no demand for your condo (or anybody else's nearby) that's a surefire sign that your property has lost some value.

you can always try 325k. check to see how much properties around you are selling for before you panic.

when i said really hasn't, i was comparing to other cities that have lost 20%+.
in reality, maybe it's lost 2-3% based on listings i see on MLS.

 

[BlahBlahYouToo]

Originally posted by: Rumpltzer

Originally posted by: BlahBlahYouToo

Originally posted by: ViviTheMage

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

yeah, i don't want to lose my $.
so i'm basically i either sell at a loss or lose it all to the bank.

Which of these two alternatives would you prefer.

Good luck man.

nah, it's cool. i'm doing fine financially... was just thinking up hypothetical situations.

 

[IEC]

Come on guys... ATOT is slacking.

OP should find a sugar momma to help pay the bills. Win win.

 

[dbk]

You should go below the comps and sell ASAP before the bank comes with the hammer

 

[Injury]

Originally posted by: ViviTheMage

Originally posted by: boomhower
Why can't you sell for the balance? If its actually worth $350 and you have 100k equity, selling for $250-$300 should be very easy.

but wouldn't he lose almost every penny he's put into it?

and if the other option is foreclosure, then he's lost every penny he's put in to it and his credit is ruined as icing on the cake.

Like people have said in the thread though... if it's worth $350k then he should be able to sell it for $350k... otherwise it's not worth that. He'd still come out with a little bit of money. Pricing it well below what it is worth would only mean it would be a better deal and would sell faster rather than sit on the market for however long.

 

[lizardboy]

Originally posted by: Mwilding
Let's make up some numbers.

$500,000 price

You bought it with a 20% down payment and therefore have a $400,000 mortage (and $100,000 in equity).

Since you bought it, you have made some improvements, the market has gone WAYYYYY up and come back down again.

Let's say your house is now worth $550,000, so you have $150,000 in equity.

If the bank forecloses, I do believe you are SOL on all of it. IF you are unable to make your mortgage payments you are far better off selling the house and getting your $150,000 out of the house than letting the bank take it. If you had to, you could price it low for a quicker sale.

That aint right - the bank doesn't get to steal his equity. If the house is foreclosed on, it will be sold, most likely at a foreclosure auction. While these things go cheaply, it will probably still sell for more than $400K. After the bank gets back its money, anything leftover would go to the owner. You're still much better off selling it yourself, but the bank doesn't just get to keep any money leftover after it is made whole.