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Old 02-25-2009, 03:14 PM
 
Location: NH Lakes Region
343 posts, read 1,389,517 times
Reputation: 414

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My home value dropped about 19% in the 3 years since I bought it, and I bought in the range I was comfortable paying. That is not to say that I am not upset that my 20% downpayment on my fixed rate mortgage has almost entirely disappeared. I'd been paying extra on principal from the start, and I thought to refinance with the really good rates we're seeing... that's when I got hit with the reality of how much my home value fell.

Look at the words above... this is my home, and I'd be paying rent anyway even if I hadn't bought, and at least I get the interest tax deduction at the end of the year. I have no plans on walking away from my commitment to pay for my home, but, thankfully, I am not underwater.

If you can afford your payments, it is pretty irresponsible to just walk away. You should be grateful that you did buy within your means. Personally, I think that ANYONE that voluntarily just walks away should have quite the flag on their finances for quite a number of years. Have a five year moratorium on them buying a house, and maybe for the next 10 years, not only would they need to come up with a 20% downpayment to avoid PMI if they ever DID try to buy again, but since they beat feet once, there should be a nice little "Fair Weather Finance Fee" tacked onto their monthly payments (would not go to the banks/lenders, but be used to pay down some of the debt the country ran up bailing them out in the first place.) Twenty years would work just as well for me!
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Old 02-26-2009, 05:18 AM
 
370 posts, read 885,963 times
Reputation: 659
Quote:
Originally Posted by cleasach View Post
That's great. But my spouse and I are teachers in private education, have no debt or loans and if we write out what we can afford (probably $200k at the very max) there is absolutely nothing available at that price. And we live in a "working class" area in New York.

The cost of rent, utilities and medical insurance eats up a lot of our income so there's not much left to save. We'll never have a downpayment, closing and moving costs on a $250k place. We'll be dead first.

That's a whole lot different than 30 years ago when a single income (not yours, I'm just saying in general) was still able to afford a mortgage payment.

So you see, there are those of us who work hard, save what we can, don't run up credit cards, buy an economy car, don't take vacations or spend on very much outside of the necessaries who sit on the sidelines waiting and hoping that prices will come down to within reach only to see people who overspent their means, speculated, made bad choices or what have you getting a bail out.

That hurts.
That is terrible, the cost of living there. Why can't you two move away and get jobs elsewhere in a more affordable area. I would think with being teachers that would not be too difficult. Isn't there a shortage of good teachers now? Plus you could move somewhere where the weather is decent. I know there are nice houses around me for about 150,000 ( Tenn)
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Old 02-26-2009, 06:18 AM
 
370 posts, read 885,963 times
Reputation: 659
Speaking of moral and integrity.....

How much morality and integrity do the CEOs of these banks have taking outlandish bonuses in this economy. Well, walking away is my outlandish, ridiculous bonus....My bailout. If I can pay taxes for years (25) at 30% bracket and then I have a difficult time in my life, I am still expected to keep paying the taxes and supporting all the dead beats and ridiculous government decisions, buying Obamas helicopters, yada yada yada. I get no break on my paycheck, I don't get a bailout bonus. If I could have just kept my gross for 6 months I could get out of trouble. So...... Screw it, Walk away. Enough is enough. Push the usual middle class taxpayer enough and at some point you quit giving a crap about if its moral or having integrity because no one else gives a crap so why should you?? My house was appraised at 450,000 and I owed 400,000. Never late on a payment. I went to sell it after divorce in 2006 and the realtor said that I'd be lucky to get 365,000. I walked away. The housing depreciation is not my fault and 50,000 equity is a lot to lose. I owned the land before the house was built. I have the signed appraisal from the bank that it was worth 450,000 less than a year before trying to sell it and when they questioned me about what I was going to do I said well according to this appraisal with my loan papers I am letting you have 50,000 worth of equity so quit crabbing. If you have a problem with it keep 50,000 of the CEOs ridiculous bonus. Better that the bank that has billions lose than me who has thousands. I am not buying commercials at the super bowl or throwing huge parties afterwards. There is no way I would sell that house for 365 and then come to closing and pay another 40,000 or so because of this economy. So what do I do. I move and take 40,000 cash plus 40,000 from 401K and pay cash to the owner for a modest home on 13 acres in the middle of nowhere with very low property taxes. Call me immoral or say I have a lack of integrity but I'm still paying those darn 30% taxes which is a lot more than many of us.
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Old 02-26-2009, 06:40 AM
 
9,113 posts, read 5,678,843 times
Reputation: 5270
Sure am underwater...about $50k as far as I can tell. It's a moderate home but several years ago (about the peak of home prices) I had a business deal go bad , I needed some money and did the refi /equity thing. That is where I went wrong. If I wouldn't have done that I would probably be fine right now. Combine that with my layoff 6 weeks ago and if I can't get a loan mod .. it looks like MI will be getting another foreclosed house. Being a designer in the automotive industry pretty much means right now that I won't be finding a job anytime soon, it's looking like I'll be retraining into something new. Either way I will be off for a long time.
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Old 02-26-2009, 10:23 AM
 
Location: State of Superior
8,578 posts, read 13,473,045 times
Reputation: 2708
I feel so fortunate , that I took the bull by the horns , and sold out over a year ago. ( Sold it on Ebay ).
yes , I lost about 100,000 from top dollar , but , still got my equity , enough to start building ( half done ) , no money , but , I don't owe anyone ether........ Its a good time to build , I think right now , no worry about prices....foreclosures , short sales , and you have the time on your side. Its nice to be in the drivers seat for a change. All the subs , and the suppliers are willing to deal like never before !
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Old 02-27-2009, 02:28 PM
 
930 posts, read 2,123,035 times
Reputation: 1000
Quote:
Originally Posted by Snafu View Post
My home value dropped about 19% in the 3 years since I bought it, and I bought in the range I was comfortable paying. That is not to say that I am not upset that my 20% downpayment on my fixed rate mortgage has almost entirely disappeared. I'd been paying extra on principal from the start, and I thought to refinance with the really good rates we're seeing... that's when I got hit with the reality of how much my home value fell.

Look at the words above... this is my home, and I'd be paying rent anyway even if I hadn't bought, and at least I get the interest tax deduction at the end of the year. I have no plans on walking away from my commitment to pay for my home, but, thankfully, I am not underwater.

If you can afford your payments, it is pretty irresponsible to just walk away. You should be grateful that you did buy within your means. Personally, I think that ANYONE that voluntarily just walks away should have quite the flag on their finances for quite a number of years. Have a five year moratorium on them buying a house, and maybe for the next 10 years, not only would they need to come up with a 20% downpayment to avoid PMI if they ever DID try to buy again, but since they beat feet once, there should be a nice little "Fair Weather Finance Fee" tacked onto their monthly payments (would not go to the banks/lenders, but be used to pay down some of the debt the country ran up bailing them out in the first place.) Twenty years would work just as well for me!
Nice post!! Could not agree more. I wrote a check for 25k on the last investment property I sold in July 2007. Why did I write a check for 25k? Because I signed the mortgage papers, I gambled, and I lost.
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Old 02-27-2009, 03:33 PM
 
Location: State of Superior
8,578 posts, read 13,473,045 times
Reputation: 2708
An interesting side bar here. Something I have been seeing happen , the need for real cheap quick housing.

I have a very old ( Classic ) GMC Motor Home that I put on Ebay from time to time. lately , the bidding , and questions , have been very heavy. I was surprised , until I saw what people are wanting to do, look for a place to live because their home is being foreclosed. The bidding runs out at around 5,000 , so , I guess thats what a lot of folks can muster up. .. Looking on Ebay , the story is repetitive , lots of bids on old self contained motorhomes.

An interesting twist , on the reflections of the Thirties , when tent cities sprang up everywhere , packed with homeless people..... The most interest does come from the south however. Living in a Motorhome in the dead of winter , in the far North , would be tough. I am holding out for 6500 , so , no buyer yet , but , you never know.... maybe a new business model could be happening. Interesting outlook on the state of our economy , and , the way people find to survive.
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Old 02-27-2009, 10:45 PM
 
3,720 posts, read 4,444,781 times
Reputation: 4741
Quote:
Originally Posted by dgrilley View Post
A lot of us weren't really the irresponsible when we bought our homes and we don't live extravagant lifestyles. I drive a $15,000 vehicles, rarely go out to eat, rarely spend money on anything outside of basic necessities. I have almost no debt outside of my student loans. My reward for doing all this is to pay on a mortgage that won't be worth what I paid for 25 years? I bought a house for the amount I did because I thought it was worth that. Turns out it isn't really even worth half that because the banks artificially inflated the prices. Why would I continue paying them when it almost entirely their fault that the market has done this. If they hadn't done this I would have bought a house for what they were really worth which is today's price.

You can get as angry as you want about it, but the fact is our system will not reward you in any way if you stay in your home. The day the bank forecloses on me I will gain $220,000 in net worth. Realistically I'm gaining around $250,000 because I'm living for free for at least 7 months.
Anyone who cares about their long term finances that bought a house between 04-07(in a bubble market with no money down) should walk away. With the amount of money you save while foreclosing you won't need to finance anything. It will disallow you from purchasing a home for a few years, but the market probably isn't even done bottoming out yet.
You are the one who decided what it was worth by agreeing to the price. YOU. Not the banks.
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Old 03-01-2009, 08:27 PM
 
9,113 posts, read 5,678,843 times
Reputation: 5270
Quote:
Originally Posted by darstar View Post
An interesting side bar here. Something I have been seeing happen , the need for real cheap quick housing.

I have a very old ( Classic ) GMC Motor Home that I put on Ebay from time to time. lately , the bidding , and questions , have been very heavy. I was surprised , until I saw what people are wanting to do, look for a place to live because their home is being foreclosed. The bidding runs out at around 5,000 , so , I guess thats what a lot of folks can muster up. .. Looking on Ebay , the story is repetitive , lots of bids on old self contained motorhomes.

An interesting twist , on the reflections of the Thirties , when tent cities sprang up everywhere , packed with homeless people..... The most interest does come from the south however. Living in a Motorhome in the dead of winter , in the far North , would be tough. I am holding out for 6500 , so , no buyer yet , but , you never know.... maybe a new business model could be happening. Interesting outlook on the state of our economy , and , the way people find to survive.
I'm sorry for making light out of something this serious but after reading your post all I can think of is Randy Quad in Christmas Vacation.. in the driveway with his big RV.
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Old 03-01-2009, 10:23 PM
 
3,720 posts, read 4,444,781 times
Reputation: 4741
You guys should review ThatGuyWHo's blog. He's covered most of this stuff.
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