When is enough enough? (mortgage thread)

[Hacp]

I'm in an extremely similar situation having bought a condo that has depreciated by potentially as much as 50%.

I'm also looking to buy a house in the next year as I hope to start a family etc. To me my only clear option is to Rent out the condo. I'll lose $200-400 a month by doing so but at least that's tax deductible.

I don't see it as an option to somehow foreclose or have some sort of modification while trying to purchase a house. But if someone knows a way, speak up!

I still fail to see why government likes to give tax deductions for this stuff. They're basically choosing winners and losers. Renters lose, people with home loans win.

 

[CycloWizard]

I still fail to see why government likes to give tax deductions for this stuff. They're basically choosing winners and losers. Renters lose, people with home loans win.

That's the function of modern government: take money from one group and give it to another based on arbitrary criteria.

 

[alkemyst]

what's gonna piss you off even more is that i heard they're offering to reduce principal to troubled homeowners, up to $50k for 5 years, so that their monthly payment is lowered.
if they remain current on their payments for the duration of 5 years, it becomes permanent.

lets screw all the responsible homeowners and bail out all the other idiots instead.

People are confusing those that were flippers with those that simply picked the wrong time to buy.

Many can afford to make their payments and didn't lie to get their mortgages. The problems is many like myself are now in a home worth 1/3 to 1/2 of what they paid. There will never be a recovery of that within 5-7 years...if ever. My home is worth 39% of what I paid only two years ago when I was being told by everyone the bubble was burst.

There is no way I am going to recover hundreds of thousands of dollars within the next 7-10 years if ever.

People also don't realize the 'cost' of the original HAMP was not that bad. They are looking at the total projected cost of it, but sadly only a few have entered into it.

In a day where taxes are being used to keep CEO's and other at $900 of income for every $1 the average employee makes, going after helping homeowners is stupid.

It's not a free ride. I am not wealthy yet I still didn't qualify for a principle reduction. They put me at .31% of my income for my payment by reducing my rate. I ended up with a 2% rate for 5 years, then +1% each year up to 5%. I roll back into roughly today's rate and still owe my full principle.

My old rate was 6.875 with PMI build into it through the loan program I choose.

 

[JTsyo]

FWIW, I currently live in a 2 bedroom condo with my wife and 2 year old daughter. It's enough room for the 3 of us. We are thinking about a second child, so time to move, because 4 in a 2 bedroom won't work.

Suck it up and sit tight for a couple of more years. You can handle a wife and kid in a 2 bedroom. When it is time for the second kid, then make the move. Hopefully your place will be worth a little more.

growing up, five of us lived in 2 bedroom until I was in HS. Brother and I shared a room, parents and sister in the other. Didn't seem too bad at the time. It's just a matter of what you're used to.

 

[TruePaige]

Under a lot of rules lately they can't kick you out of your house for not making payments. Not sure how long you could stay but you could bank all your mortgage payments (free rent) until they offer to work with you (which they will with all the government incentives I hear).

 

[KeithTalent]

For starters, stop blaming everyone else. And stop complaining that it's "not fair" when you want to stick someone else with a $70k loss for a house that you bought.

Did ou read the whole OP and subsequent posts?



Sorry to hear OP, I hope it works out for you. My ex-wife is in a similar situation and trying to decide what to do with her current place. It's not quite at level of loss as your place, but the impact for her is just as great.

Anyway, good luck.

KT

 

[FelixDeCat]

Under pressure by Massachusetts prosecutors, Bank of America Corp. said Wednesday it would reduce mortgage-loan balances as much as 30% for thousands of troubled borrowers, in what could presage a wider government effort to encourage banks to offer debt reduction to ease the mortgage crisis.

The plan is one of the boldest moves yet to address the plight of millions of U.S. homeowners who are "under water," owing more on their homes than they're worth. It could make it easier for the Obama administration to move in a similar direction with its existing loan-modification program, although senior government officials and many bankers remain very wary of offering to cut loan balances as the main way of helping distressed borrowers.

So far, most modifications, including those under the government-subsidized Home Affordable Modification Program, involve reducing interest rates. Some also extend terms to 40 years, to shrink monthly payments.

But banks are finding that some borrowers aren't willing to keep making even reduced payments, believing they have little hope of ever having equity in their homes and might be better off renting, and perhaps buying a less-expensive home later.
"Severely under-water homeowners are reluctant to accept a solution that does not offer some reduction in principal," said Barbara Desoer, president of Bank of America Home Loans. "The whole purpose of the program is to get more customers to return phone calls" and make payments for trial modifications so workouts can be made permanent, she added.

Full story here: http://online.wsj.com/article/SB10001424052748703312504575141763259183050.html?ru=yahoo&mod=yahoo_hs

Bank of America will reduce principal on underwater homes by up to 30%. Maybe your bank will join in. And dont give up trying to work with the bank on favorable terms including a short sale (its not as bad as you think). I worked for a mortgage bank for 17 years - trust me - anything is possible. You just have to be an EXTREME pain in the ass, but you will get your way eventually.

 

[soulcougher73]

This is the result of people buying homes as investments and not buying a home as a home to live in for a long time. I close on my 1st home March 30th and i plan to live there as long as possible if not forever. It if appreciates i dont really care because i did not buy it as an investment tool. People are treating home ownership like the stock market. Buy low/sell high. Bad idea as obvious by the bubble bursting.

 

[Slew Foot]

Time to turn into a dirtbag sleazeball and get on Obama's gravy train. Hide all your savings somewhere (buy gold, something you can sell for cash easily later). Stop paying your mortgage, have your bank redo your loan with some BamaBucks, walk away happy.

 

[mugs]

Did ou read the whole OP and subsequent posts?

Yeah, I did. I saw a lot of complaining about bad advice he received, complaining about what others are able to do, and he complains that it's not fair that he paid more for his house than people are paying now for better houses.

I have sympathy for the guy, because he lost a lot of money due to the poor housing market. I have a lot more sympathy for people who have lost their jobs and are doing whatever they can to keep their home. This guy wants to pass his loss off to someone else and then take advantage of the depressed housing market to get into a house that he otherwise wouldn't have been able to afford.

I doubt it's going to work, because he probably won't be able to get another mortgage anytime soon.

 

[alkemyst]

Yeah, I did. I saw a lot of complaining about bad advice he received, complaining about what others are able to do, and he complains that it's not fair that he paid more for his house than people are paying now for better houses.

I have sympathy for the guy, because he lost a lot of money due to the poor housing market. I have a lot more sympathy for people who have lost their jobs and are doing whatever they can to keep their home. This guy wants to pass his loss off to someone else and then take advantage of the depressed housing market to get into a house that he otherwise wouldn't have been able to afford.

I doubt it's going to work, because he probably won't be able to get another mortgage anytime soon.

I think you are bitter in some way about this.

Home Ownership is one of the big things that makes America, America.

Unfortunately the wealthy decided to use it to expand their coffers. The 'poor' follow the wealthy's lead and added to the mess.

Secondary issues that came like bailing out companies that still folded and the like added to this mess.

Ultimately our dollar is fucked. It used to be you could land anywhere in the world and you fucking buck would be wanted. Now you better have access to someone that can exchange it for another currency.

But it's just like today's Americans to hate their neighbors, fellow travellers and want to join in anything that can 'stick it to them'.

We are creating our own demise.

 

[EagleKeeper]

Realize that while renting out your place the rent may be a few hundred less than the morgage payment; you also have the tax advantage of depreciation of the place based on its original purchase price. $260K divided by 15 years is $17K depreciation against the rent income.

 

[NetWareHead]

I still fail to see why government likes to give tax deductions for this stuff. They're basically choosing winners and losers. Renters lose, people with home loans win.

Tax deduction on a loss means you dont pay income tax on money you lose. You reduce your amount of taxable income. What is wrong with that?

 

[alkemyst]

Realize that while renting out your place the rent may be a few hundred less than the morgage payment; you also have the tax advantage of depreciation of the place based on its original purchase price. $260K divided by 15 years is $17K depreciation against the rent income.

problem for most is with many homes renting in the $1000/month range even in exclusive areas, it's usually more than a few hundred difference.

My payment was around $2300, the is a home in the polo area with 5 bedrooms renting for that. I'd be lucky to get $1000-1200 a month. It'd leave me with paying about the same out of my own pocket...he may break even, but in 7-10 years still be looking at stroking a $50-100k check to the buyers of his home.

The biggest fear I have is job relocation.

 

[Hacp]

Obama is artificially holding up housing prices. How will young people and renters ever afford housing if the government is propping up housing prices artificially? Let the market tank and let people who saved up money get a chance to buy a new home.

To the people that bought the house as an investment: there's a reason they call it an investment. Its not a sure thing. It has the potential to tank.

 

[Hacp]

Tax deduction on a loss means you dont pay income tax on money you lose. You reduce your amount of taxable income. What is wrong with that?

I'm talking about tax deductions for having a mortgage. Those need to go NOW.

 

[LittleNemoNES]

Ouch man. You should ask a pro for some help.

I'm so glad I didn't buy a house when everyone was doing it...

 

[alkemyst]

Obama is artificially holding up housing prices. How will young people and renters ever afford housing if the government is propping up housing prices artificially? Let the market tank and let people who saved up money get a chance to buy a new home.

To the people that bought the house as an investment: there's a reason they call it an investment. Its not a sure thing. It has the potential to tank.

housing prices are not being held up right now, at least not by the government. If you indeed have money saved now is probably the best time to buy.

However; most really don't have money saved but 1-3% of the price and then come to find out other costs. Most also do not have the credit scores needed to show they will pay their bills on time.

It's sad today that so many people just don't pay their creditors and in the days of credit cards and mortgages for everyone they accepted a credit score in the 500's or less was good enough.

Today you are going to need to be up in the 600-700's to get a loan. You will need at least 3% down and you will need to show income. There are exceptions, but you are going to need stellar credit for that. A score in the 700's means nothing if your only record is an Old Navy store card for $500.

 

[Number1]

I feel for you but let me sum this up for you.

You got yourself a brand new house at a price you can afford on terms you agreed too but now you're pissed because you would be able to get a much better house for the money you spent.

Now you're considering screwing the bank, loosing all the money you invested in the house, moving to your parents place and having no credit for 7 years.

You're also pissed the bank won't bail you out because you can make the payment you agreed too.

 

[Jumpem]

You mention about being stuck in a townhouse when you want to start a family but honestly there is no reason to get a bigger house BEFORE you start a family. You'd pretty much be fine in a 2BR townhouse with one kid. Doesn't really matter that you're turning 30 soon - how soon do you foresee yourself having a wife and a kid - that's the real question.

I agree with this. A small townhouse is perfect for starting a family. In theory, it should be cheaper than a house, allowing you to save money for medical costs, daycare, diapers, formula, baby furniture, etc.

One extra bedroom is all you need for an infant. If you have two boys or two girls they could easily share the room permanently. If you have one of each they could still share it until ten or so.

 

[Hacp]

housing prices are not being held up right now, at least not by the government. If you indeed have money saved now is probably the best time to buy.

However; most really don't have money saved but 1-3% of the price and then come to find out other costs. Most also do not have the credit scores needed to show they will pay their bills on time.

It's sad today that so many people just don't pay their creditors and in the days of credit cards and mortgages for everyone they accepted a credit score in the 500's or less was good enough.

Today you are going to need to be up in the 600-700's to get a loan. You will need at least 3% down and you will need to show income. There are exceptions, but you are going to need stellar credit for that. A score in the 700's means nothing if your only record is an Old Navy store card for $500.

Housing prices are being held up. I heard they're giving 8000 to people who buy a house. Also, there's that thing with the fed keeping rates artificially low and having 2 trillion in mortgages in its balance sheet. Take those away and housing prices WILL drop significantly.

 

[Jumpem]

Housing prices are being held up. I heard they're giving 8000 to people who buy a house. Also, there's that thing with the fed keeping rates artificially low and having 2 trillion in mortgages in its balance sheet. Take those away and housing prices WILL drop significantly.

My sister received $15,500! $8000 from the federal government and $7500 from the state. Absolutely ridiculous.

 

[HeXen]

wow, $262k in my area gets you a very nice stone or brick 4 large bedroom/2bath,finished basement/garage, brand new looking house...you got ripped. I only paid 74k for mine and still appraised for as much today though originally it was worth 79k.

 

[Greenman]

Strange thread. So many replies, no answers.
OP, talk to your lender about a short sale. What happens in a short sale is that the home sells for market value, and the bank agrees not to pursue you for the difference between the selling price and what you owe. Your credit will take a huge hit, the bank will ask for more obama bucks, everyone will be happy.

 

[Blackjack200]

Housing prices are being held up. I heard they're giving 8000 to people who buy a house. Also, there's that thing with the fed keeping rates artificially low and having 2 trillion in mortgages in its balance sheet. Take those away and housing prices WILL drop significantly.

Considering that most economists don't think we'll have sustained economic growth until the housing market recovers, it's probably a really shitty idea to take away incentives and raise interest rates right now. The supports can be gradually phased out as the market gains strength.

wow, $262k in my area gets you a very nice stone or brick 4 large bedroom/2bath,finished basement/garage, brand new looking house...you got ripped. I only paid 74k for mine and still appraised for as much today though originally it was worth 79k.

I just love it when people say "in my area" and don't say where they live. If you live in rural West Virginia, I don't care how much house you can get for $262k.