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Old 01-24-2011, 02:41 PM
 
Location: Conejo Valley, CA
12,476 posts, read 17,010,578 times
Reputation: 4304

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Quote:
Originally Posted by Texas User View Post
It an asset in terms of accouting but if your house is underwater then it isn't.
If your house is underwater its still an asset.

 
Old 01-24-2011, 06:16 PM
 
12,671 posts, read 20,538,520 times
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Quote:
Originally Posted by user_id View Post
If your house is underwater its still an asset.
In accounting it is an asset but in reality it then becomes a liability. Not only you owe more money but the value of your home may also depreciate.
 
Old 01-24-2011, 09:39 PM
 
Location: Conejo Valley, CA
12,476 posts, read 17,010,578 times
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Quote:
Originally Posted by Texas User View Post
In accounting it is an asset but in reality it then becomes a liability. Not only you owe more money but the value of your home may also depreciate.
The home is an asset and the mortgage is a liability, whether or not you're "underwater" on the home changes nothing.

Being underwater effects your net worth, it doesn't change the fact that the home is an asset. If you want to talk about the negative side of being underwater I'd suggest you pick different terms.
 
Old 01-24-2011, 10:01 PM
 
12,671 posts, read 20,538,520 times
Reputation: 2619
Quote:
Originally Posted by user_id View Post
The home is an asset and the mortgage is a liability, whether or not you're "underwater" on the home changes nothing.

Being underwater effects your net worth, it doesn't change the fact that the home is an asset. If you want to talk about the negative side of being underwater I'd suggest you pick different terms.
If the value of your home is less then what you paid for then it becomes a liability.
 
Old 01-24-2011, 10:58 PM
 
Location: Conejo Valley, CA
12,476 posts, read 17,010,578 times
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Quote:
Originally Posted by Texas User View Post
If the value of your home is less then what you paid for then it becomes a liability.
No it doesn't. If I paid $300k for a home and it goes down to $250k I now have an asset worth $250k instead of $300k. There is no liability. On the other hand whether the mortgage is $200k or $300k its still a liability.

The only difference between owning a home worth $250k and having a mortgage of $300k and owing a home worth $250k and owing $200k is that the former subtracts $50k from your net worth and the latter adds $50k to your net worth.
 
Old 01-24-2011, 11:11 PM
 
12,671 posts, read 20,538,520 times
Reputation: 2619
But you are at a $50K loss.

Quote:
Originally Posted by user_id View Post
No it doesn't. If I paid $300k for a home and it goes down to $250k I now have an asset worth $250k instead of $300k. There is no liability. On the other hand whether the mortgage is $200k or $300k its still a liability.

The only difference between owning a home worth $250k and having a mortgage of $300k and owing a home worth $250k and owing $200k is that the former subtracts $50k from your net worth and the latter adds $50k to your net worth.
 
Old 01-25-2011, 11:14 AM
 
Location: Conejo Valley, CA
12,476 posts, read 17,010,578 times
Reputation: 4304
Quote:
Originally Posted by Texas User View Post
But you are at a $50K loss.
Your net worth is $50k lower. Net worth = asset - liabilities.

Anyhow, you are conflating the home with the mortgage, yet they are two different things. The home is an asset, the mortgage is a liability.
 
Old 01-25-2011, 11:17 AM
 
Location: Moscow
2,078 posts, read 2,918,156 times
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Quote:
Originally Posted by user_id View Post
Your net worth is $50k lower. Net worth = asset - liabilities.

Anyhow, you are conflating the home with the mortgage, yet they are two different things. The home is an asset, the mortgage is a liability.
I want to go on record as agreeing with user_id in this instance. In an accounting ledger they are two separate entries.
 
Old 01-25-2011, 02:59 PM
 
12,671 posts, read 20,538,520 times
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Quote:
Originally Posted by Keim View Post
I want to go on record as agreeing with user_id in this instance. In an accounting ledger they are two separate entries.
In an Accounting term, this is correct.
 
Old 01-25-2011, 03:05 PM
 
Location: Conejo Valley, CA
12,476 posts, read 17,010,578 times
Reputation: 4304
Quote:
Originally Posted by Texas User View Post
In an Accounting term, this is correct.
And like I said, you need to pick different terms to describe what you're trying to say. Asset has two definitions, one is the accounting notion the other essentially means "useful/desirable". For example, "Jim is a real asset to the team". A home is an asset in the first sense, not the second. Nobody thinks having an underwater home is useful or desirable...
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