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Yes, you bought the house for more than it's worth now. But you still have the option to live in it, or rent it out. Wrecking your credit and causing a lot of trouble don't make sense to me, unless you just can't make the payments.
Yes, you bought the house for more than it's worth now. But you still have the option to live in it, or rent it out. Wrecking your credit and causing a lot of trouble don't make sense to me, unless you just can't make the payments.
But don't you see, we shouldn't have to be responsible for our own stupid mistakes. The government will bail us out, they always do, even when we repeatedly do dumb things. We can just walk away and let the taxpayer shoulder the burden of our financial irresponsibility. After all, it's the American Way! Why should I have to take responsibility for anything I do?
read the other thread about 2008-2009...in which some one explains how to become a scumbag and let society pay for free housing....and how to become close or even become a felon!
yes, I read that unfortunate thread--I wasn't impressed with that "strategy"
Quote:
Originally Posted by bentlebee
read the other thread about 2008-2009...in which some one explains how to become a scumbag and let society pay for free housing....and how to become close or even become a felon!
Because you can buy an identical place down the street, bail on your current house and live the same lifestyle for less money.
I'm not saying it's right, and it amazes me that it is legal over here. In the UK it's not - if you sell for less than you paid for your house you are still responsible for the difference.
Here it is legal (although buy and bail smacks of fraud to me), so people take advantage of it.
Yes, you bought the house for more than it's worth now. But you still have the option to live in it, or rent it out. Wrecking your credit and causing a lot of trouble don't make sense to me, unless you just can't make the payments.
most people sell in 3 to 5 years after buying. Not all, but most.
If you are upside down by 50 to 250% or more over what it is worth than you will never be able to sell.
Regardless of being a subprime or a prime loan. (subprime make up a small amount of mortgages, regardless of what the talking points int he media say)
You cannot rent out the house since your PITI is probably 2 or 3 times what rent in that neighborhood is.
Most likely you were talked into an ARM even with good credit. As rates rise that 1 -4% loan will increase by 3-4% per year (or monthly depending on how bad the loan was)
So thirteen months after your Fixed goes adjustable, you could be paying an extra 6% interest. And the following year make that 9%.
People bought a 150,000 home in 2005 for 500,000 for the same monthly payment due to low interest rates.
Those homes are going back to 150,000. So you are paying an extra 350,000 for that home. PLUS the high interest on a loan you CANNOT refinance due to being upside down means you may pay over 800,000 for that home.
It is a simple business decision. It is not different than buying a car for 4 times its value and then realizing you got sold a bill of goods. You just turn the car in and buy or lease another. The car company takes it back and sells it and then asks you for the leftover amount.
The problem is a lot of people are aghast a person is allowed to make a business decision like this. Not that businesses do it all the time and it is a normal business procedure.
The question is, why would you stay in a house that is upside down? That is completely ridiculous to do.
The bank is not losing money on it. Between the 3 to 5 years you payed Principal and interest they made 50 to 70% of the loan back already.
The money they lent was gotten at 1 ro 2 % or less.
Plus they have mortgage insurance to cover the loss, not the money they did not get, but the money versus what is owed on the note
(in other words, you may have paid P&I for 4 years, 60% of the loan or more, but on 'paper' it was all interest and no principal, so the mortgage insureance will cover the 99% of the loan.
So they are already rolling in dough. Now add some bailout money and tax write offs.
And then they get to now take that money they got at 1% and give it to another sucker at a 5% arm and so on.
Why should anyone stay in a home that is upside down? It makes no sense and it has nothing to do with honor or 'paying your bills' it is a business decision.
of course, those who hate all other people will see this different and want to destroy anyone (except businesses) that walk away from a contract.
read the other thread about 2008-2009...in which some one explains how to become a scumbag and let society pay for free housing....and how to become close or even become a felon!
most people sell in 3 to 5 years after buying. Not all, but most.
If you are upside down by 50 to 250% or more over what it is worth than you will never be able to sell.
Regardless of being a subprime or a prime loan. (subprime make up a small amount of mortgages, regardless of what the talking points int he media say)
You cannot rent out the house since your PITI is probably 2 or 3 times what rent in that neighborhood is.
Most likely you were talked into an ARM even with good credit. As rates rise that 1 -4% loan will increase by 3-4% per year (or monthly depending on how bad the loan was)
So thirteen months after your Fixed goes adjustable, you could be paying an extra 6% interest. And the following year make that 9%.
People bought a 150,000 home in 2005 for 500,000 for the same monthly payment due to low interest rates.
Those homes are going back to 150,000. So you are paying an extra 350,000 for that home. PLUS the high interest on a loan you CANNOT refinance due to being upside down means you may pay over 800,000 for that home.
It is a simple business decision. It is not different than buying a car for 4 times its value and then realizing you got sold a bill of goods. You just turn the car in and buy or lease another. The car company takes it back and sells it and then asks you for the leftover amount.
The problem is a lot of people are aghast a person is allowed to make a business decision like this. Not that businesses do it all the time and it is a normal business procedure.
The question is, why would you stay in a house that is upside down? That is completely ridiculous to do.
The bank is not losing money on it. Between the 3 to 5 years you payed Principal and interest they made 50 to 70% of the loan back already.
The money they lent was gotten at 1 ro 2 % or less.
Plus they have mortgage insurance to cover the loss, not the money they did not get, but the money versus what is owed on the note
(in other words, you may have paid P&I for 4 years, 60% of the loan or more, but on 'paper' it was all interest and no principal, so the mortgage insureance will cover the 99% of the loan.
So they are already rolling in dough. Now add some bailout money and tax write offs.
And then they get to now take that money they got at 1% and give it to another sucker at a 5% arm and so on.
Why should anyone stay in a home that is upside down? It makes no sense and it has nothing to do with honor or 'paying your bills' it is a business decision.
of course, those who hate all other people will see this different and want to destroy anyone (except businesses) that walk away from a contract.
That is what is wrong with america.
I actually agree with you. It is absolutely a business transaction. It is true that most people want to unload after 5 years, so under that constraint most people find it NOT worthwhile to wait until the property value recovers, which in the case of many of these properties, it would take the full amortization period just to go back to bubble levels, if that. The reason this particular decision-making is viewed differently than the car example is that people attach their own stakes into the decision of their neighbor. Since property values are affected by the decision-making of a few (at least in perception) people become indignant when their neighbor pulls that stunt and they perceive it as a personal attack on their own net worth, since most people are hopelessly sitting on their houses as the way to afford anything in their lives long term. That's why you hear so much belly-aching from people when it comes to housing and not so much when it comes to vehicle purchase.
As much as I disagree with the common idiocy of unloading houses every 5 years and looking at homes as a freggin ATM machine, the fact remains that under those economic conditions it is not wise to hold on to the house. And ditto about the banks, no way I'm feeling bad for the banks, they're making out like bandits in all of this, while they multiply my meager savings account deposits at 2% APY and lend 9 times my deposit out of thin air and load it up in a ARM. Screw the bank. And screw the Federal Reserve while I'm at it, for robbing me from my own purchasing power daily and giving it to private profiteering hands of these banks in the ultimate ponzi scheme we call our monetary system. And you thought there was no connection between a 500,000 cracker jack house and your need for dual-income household to afford said house, I digress.
So in essence, if you plan to live in that house forever then it doesn't really matter what the fluctuations of value are, since the utilitarian value to you justifies the cost; houses are in my book just that, utilities and hence liabilities, just like a boat. But when most of america EXPECTS to move out of said house in 5 years then yeah the shell game has to be played, and in that regard it'd be foolish to throw money away like that. If there was debtor's jail in this country people would own up, but since all the repercussions is a 'scary' credit ding, most people aren't faced by that. To those of us who don't even need credit to substantiate our frugal livelihoods then that is really a free ticket to a one-time shopping spree heist, if you really want to get cynical.
Leaving aside someone who has to move for job reasons, I don't understand the psychology. Go into foreclosure so that you can move to a better house? How do you even qualify for the mortgage then?
Quote:
Originally Posted by Thatguywho
most people sell in 3 to 5 years after buying. .
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