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Well if you look at it another way, your paying $75 month for approx 24 years which equals $21,600. Lets say in 24 years that condo is paid off and worth a conservative $100,000. That is a return of $78,400 on a $21,600 investment. I think thats like 7.8% per year. Not bad. And this isn't even counting the fact that rents will go up over a 24 year span, but your mortgage payment will remain the same, so you will start making money every month.
If you dont want to deal with it, just stop paying the mortgage, try to short sale it or let the bank forclose.
I bought the condo in 2006 for $140k, put $40k down. Right now it's worth about $63k. Right now with it rented it's costing me $55 a month, in January it will cost me $108 because my taxes will go up since I can't claim homestead exemption. I live in Brandon, FL. My loan was for $100k at 6.875%, payments of $656, hoa $315, taxes $9, payoff is $91,934. My closing costs were $46,399. With principle and interest until now 10-2012 I have spent $47,046 thus making my investment of $93,445. (This does not include my hoas, taxes, or utilities).
If I keep it rented for 5 years at $925 and my costs at $1033. Means I pay $108 a month for 5 years is $6,480.+$93,445=$99,925. In October 2017 my remaining balance will be $82,178. Since condo's don't go up in value very much with the mortgage collapse I'm assuming it will be able to sell for maybe $70k. So I will have $99,925 invested plus $12,178 for difference between sell price and remaining balance. Meaning my loss would be $112,103.
If I don't include closing costs or the time I lived in the condo -$53,445. I'm including the $40k down. I'll lose $58,658.
I have set my current house up so that within the first year of me living in it I will have paid off half of the house price. So financially I can afford both properties and still have a good savings, just don't like losing money.
The interest rate you're paying is pretty high. You should look into refinancing at a lower interest rate (perhaps a shorter term, too) and see how that could affect your numbers.
You might be able to appeal your tax assessment--if it's too high based upon its present value--to see if you can get your property taxes lowered as well. Have you looked into the potential of doing a short sale?
The interest rate you're paying is pretty high. You should look into refinancing at a lower interest rate (perhaps a shorter term, too) and see how that could affect your numbers. ...
Ditto, you can do much better if eligible for a refi. If your loan is backed by Fannie Mae or Freddie Mac you can even refi if underwater using a HARP loan.
No "investment" is a loss until you sell it for less then you paid. Any new car you drive off a lot is worth less then you paid for it when those wheels hit the street outside the dealers lot. It is called being upside down. Oweing more on it then what it is worth. Ones first upside down experience usually comes at a cost...as did mine...and on a car..but another story.
The real question on a home not being worth what you paid for it (upside down) is is can I ride it out? I have paid to much for this place but can I hold on (as in make the payments/mortgage) until I correct my mistake.?
How does one correct a mistake? Hold on until you can sell it for what you paid for it and say well I did not make any money but at least I am out of it and I learned. Some have said as you did have to live somewhere (unless in your parents basement for free), then maybe the cost/expenses/loss are not as bad as you think/compute, but another subject.
Other way is make more money and be able to buy yourself out of your mistake and say well it cost me money but I can afford to learn.
The worst answer is double down your bet like letting the new bet/debt carry the old bet/debt.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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Quote:
Originally Posted by jackmichigan
The interest rate you're paying is pretty high. You should look into refinancing at a lower interest rate (perhaps a shorter term, too) and see how that could affect your numbers.
No one is going to refinance $100,000 on a condo worth $63,000.
He might actually be better off renting out the house and living in the condo, if the house pencils out better. It's not as much of a loss if you are living in it, since it's a roof over your head.
So I have a condo that I bought in 06, lived in for 6 years. Just bought a house for same price I paid for condo in 06. I've ran the numbers and if I could sell it now I would lose $122k. This includes all taxes, hoas, mortgage, insurance, plus all the closing costs, and interest and principle I have paid so far, minus any rent.
Pay monthly $980, rent is $925 so costs my $75 a month now rented.
If I can sell it in 5 years at my current mortgage I will lose $112k. If I refi it through quicken loans for a 20 year loan I will lose $103k, Refi at 15 yr. lose $102k.
So any way I look at it I will be losing over $100k. I don't know if foreclosure is an option for me because I own a house and have two nice new cars plus money in savings. I'm a disabled vet who doesn't work.
Plus the way the condo market is I don't think it will go up in value much in the next 10 years. Plus the Hoa's are very high and the rent will probably go down in price and not up like I would need.
What should I do, any ideas to help cut my loses?
You should pay your bills! You have no hardship, in fact youre doing quite well, better than most of the Americans who are paying your disability checks. You have no right to stiff the taxpayers backing the mortgage on your condo so you can have "more".
I qualify for Harp. That's why I'm able to refinance through Quicken Loans for $3,500 closing costs for a 20 year REFI.4.25% or $3,800 for a 15 year 3.99% rate.
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