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Post by Emperor Cupcake on Jul 15, 2010 0:02:26 GMT -5
Yeah. So Mr. Cupcake and I bought a house back in 2003 (before the housing bubble, mind you), falling for all the crap like: Oh it's a great tax break; Oh, you'll build up all this equity; Oh, in a few years you can sell it and make a little bit of money to move out of state. And so on.
Seven years on, we decide we finally want to get out of this armpit, so I call a realtor to start the process. He does all the market analysis and so forth for a few days, and I'm all finishing up painting the rooms, doing some packing, and what not. Then today he tells me that there's basically no way I'm getting more than $55,000-$65,000 for my house, even though I paid $84,000 for it in 2003 and even though I still owe $71,000. GRRRRR!!! So what am I supposed to do? I still really want to move, but I don't relish the idea of a short sale (since I don't have enough of a financial hardship and might not qualify, and still might have to end up paying the difference, plus interest), and I don't really want to let it go into foreclosure because it will ruin my sterling credit. I considered renting it out, but Mr. says no, it's too much hassle, even though I told him we could hire a management company. So now I'm kind of stuck, thinking maybe I'll never be able to get rid of this house and move away without screwing up my financial future.
Any thoughts, commiserations, suggestions?
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Post by Mitchell on Jul 15, 2010 4:22:32 GMT -5
Wait for the market to recover.
As much as you want to move now, is it really worth taking on the long term problem to do so?
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Post by Skyroniter on Jul 15, 2010 6:52:52 GMT -5
What Mitch said. If you can't wait it out, do anything but foreclosure. Credit affects everything these days.
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Post by Shep on Jul 15, 2010 9:06:40 GMT -5
Hang in there, Mrs. EC. Things will get better.
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Post by Mr. Atari on Jul 15, 2010 9:20:47 GMT -5
Would you be buying again in the place you'd like to move?
If so, taking a $6K-$16K hit on a short sale might not be the worst thing in the world. If your credit is sterling, then you will most likely qualify for good interest rate on a new loan. And rates have come down drastically since 2003.
So if you find a house you like somewhere else, and you qualify for an interest rate that's, say, 3% better than what you have now, adding $10K to the value of the new loan won't amount to much of a difference at all in your monthly payment.
While you'll still eat the difference, you'll be eating it over 30 years in a new mortgage on a house you'll want to live in while the market recovers.
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Post by Mitchell on Jul 15, 2010 9:28:58 GMT -5
A short sale can be tough to work out. The original note may have a clause indicating that any short sale has to be approved by the note-holder. Rolling the remainder of the original note into the new one may upset the equity ratios and may make it tough to find someone willing to supply the new mortgage note. I don't know the financial details involved, so I'm speaking in generalities.
I do know in some of the worst markets, like my mother and sister in Metro Detroit, and my mother-in-law in South Florida, have seen appreciation this year. Sitting on the property for a little while may be the best option. . .but again, since I know no details, it's a generality.
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Post by inlovewithcrow on Jul 15, 2010 9:39:54 GMT -5
I'm sorry you're frustrated.
Yeah, there's nothing to do but wait. I'm in a similar situation with all my retirement money being tied up in the stock market, and I really, really want to be out of it and not let those idiot rich people misuse and grow richer off my money any longer. But unless I want to burn tens of thousands of dollars, I can't get out today, though I'm angry today. I'll just have to wait, and when it's right to move it all to a bank, I'll be tempted to leave it be...but not that tempted. I'll remember.
We're living through a rare time. Real estate has gone up and up my whole life (except for one weird phase in Houston back when). The stock market really did average 10% up per year most of my life, not 10% down per year over three years. It sucks. But talk about "things you can't control." Macroeconomics tops the list.
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Post by Mr. Atari on Jul 15, 2010 9:44:26 GMT -5
A short sale can be tough to work out. The original note may have a clause indicating that any short sale has to be approved by the note-holder. Rolling the remainder of the original note into the new one may upset the equity ratios and may make it tough to find someone willing to supply the new mortgage note. I don't know the financial details involved, so I'm speaking in generalities. Yeah, it would only work if you had the right lenders and a high enough credit rating. There's also a lot in the recent bailout plan to help banks help good customers who are upside-down on their notes. Just last week, I got a call from Wells Fargo (our lender) offering a restructured loan with a 2% rate decrease, since we owe more than our house is worth*. It won't cost us a thing, because Uncle Sam gives them a stipend for every one of these they do. After all, everyone wins when paying customers stay in their homes. So for a measly trillion or so for the next generation of taxpayers to pay, I can save a hundred bucks a month on my mortgage. Viva Democrats! *We bought in 2007. We love the house and the area and plan on staying here for a long time, so it's not as severe a situation as the Cupcakes. But it still is very unnerving to be upside-down.
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Post by siamesesin on Jul 15, 2010 10:00:21 GMT -5
This is a completely different direction, but what about renting it?
I know there's a lot of inherent problems in renting, but I do know people who have managed to even make money doing it. It's big business in my neighborhood, which has slightly older, smaller houses but really good schools.
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Post by Emperor Cupcake on Jul 15, 2010 19:08:28 GMT -5
Yeah, I actually had considered renting it out, but I think it would be too much trouble; I'd still have to pay for repairs and stuff, and I really can't afford to do that. Plus I would have to pay a management company a 5-10% monthly fee to collect rent, choose tenants, set up contractors, and so forth. And no, I'm not thinking of buying another house (EVER), because it's just too much of a headache. I like to be able to move around freely, and owning a house seems like a big anchor around my neck.
After considering the options, what I basically did was contact another realtor who is supposed to be coming out tomorrow to give me a "second opinion" (I didn't tell her about the first one). Then I might take some of my savings and pay down as much of the principal as I can for the next few months. My mortgage is paid up until the middle of next year, so it's not like I'm in dire financial straits or anything, I just really wanted to move. Considering what the second realtor says tomorrow, I might either wait a little while, or put the house up for sale for slightly more than I owe on it and see if I get any takers. If not, I still have until next year before I would have to start making mortgage payments again, and I will have paid down some more of the principal by then, so perhaps I'd be able to lower the price without having to take a loss.
Thanks everybody for giving me advice and talking me down from the precipice! I really appreciate it. I was super pissed off yesterday when I posted that, but I've calmed down some now. :-)
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Post by Skyroniter on Jul 15, 2010 19:30:44 GMT -5
Certainly a second opinion is a good idea. Wouldn't hurt to have a third. Have tax values been reevaluated since the bust? They typically aren't real accurate but still might give you some idea of the market value.
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Post by Chuck on Jul 16, 2010 5:08:10 GMT -5
A guy I used to work with built a new house, landscaped the yard, and had it looking great, when his wife was transferred to Houston. The house was appraised for $400,000. He's trying to sell it, and has had to drop the price, again, this time to $190,000.
It's the market. See if you can wait.
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Post by Bix Dugan on Jul 16, 2010 9:53:26 GMT -5
I was a co-owner of duplex in Spokane for a couple of years in the early 90s. We had a property management company do all the logistics while we lived in L.A. It worked out well. Cupcake, one day you'll need a place to retire in. You may be in situation where renting could pay off that house over the next twenty years. In the meantime, you and the hubby could be galavanting all over the country. Then when you're ready to retire, you'll be able to retire in your paid-off home in Florida. Which is everyone's dream, right?
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Post by Mr. Atari on Jul 16, 2010 9:59:08 GMT -5
Cupcake, one day you'll need a place to retire in. You may be in situation where renting could pay off that house over the next twenty years. In the meantime, you and the hubby could be galavanting all over the country. Then when you're ready to retire, you'll be able to retire in your paid-off home in Florida. Which is everyone's dream, right? I've met Cupcake before; and I just can't imagine her "galavanting". Although, it would be a sight to see.
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Post by Bix Dugan on Jul 16, 2010 10:29:45 GMT -5
She would, of course, galavant side-saddle. She's a lady, afterall.
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