Underwater mortgage?

Negative equity ftw.

I'm too young to have such problems

 

I bought my house for $160K 3 years ago. Two years ago it appraised at $205K. Now, it's estimated at $145-150K.

 

I own my house in LO free and clear and have a mortgage on my home in Denver. I do know several people, however, whose homes have negative equity value. The only advice I can give them is to keep paying their mortgages--and pay them down if you can--and one day their equity position will go right side up.

 

None of my real estate is underwater. I have lost paper value on some, but I don't owe more than the market value on any.

Unless people are FORCED to move for some rare reason, primary residence homes being underwater doesn't really matter, right? What's the big deal?

 

Well, if you could move down the block and pay half as much in rent as you do now in a mortgage payment, there has to be a mighty temptation to just default on your loan. Particularly if you haven't built up much equity.

I'm not planning on doing it. But I was just visiting my brother in his 4 room house he's renting (built in 2004). He's paying $100 less a month than me to live in a far nicer neighborhood in a much more modern home (my house was built in 1955). Have to admit the thought crossed my mind.

My home isn't underwater, but by the time the real estate market finally shakes out it'll probably be worth the same as what I paid for it in 2004.

 

Agreed. Actually, the government has added incentive to do exactly what you describe. You used to have to pay taxes on the amount you were "gifted" by getting out of your old mortgage. That has been removed, and it costs you very little to move two homes down, for 30% less mortgage.

 

My property is ON the water, but not under water.

 

You forgot this option in the poll-------> : No, I rent my house/duplex.

 

really don't put much into this stat. if its underwater, tough shit, the market went down, it will eventually come up. unless people bought their houses that they couldn't afford (which is probably likely many did, but they lose their shit...big fucking deal, they shouldn't have been able to have it in the first place).....all should be good. they make the payments.

 

I got lucky twice. First house I bought for $225 and sold for $325 about two years later. Then I got married and wife sold her house around same time at peak of housing boom. We did buy one house, but we don't plan on moving for at least another 18 years. Its value did go down, but it went up so much after we bought it that it is still worth more than we paid (according to Zillow). Plus, we have a lot of equitity in it because we put 100K+ down.

 

zillow? i remember that shit from the early housing boom when people were showing off how much money they were making on their houses. all the numbers seemed way overinflated.

 

Nope, according to Zillow, I'm not under water, but I think those values are still a little inflated.

I purchased my home for $188,000 5 years ago. During the boom, homes similar to mine were going for $285,0000 and now it's back down to $235,000. I took out about $55,000 in home equity loans for my wife's school, cost of living, and credit card debt, but I'm still ok. I'd probably break even at this point if I sold my home and paid the realtor.

 

Exactlt . . defaulting (just like BK) can be used as a tool if you are buried in your house.

Why wait it out. If you have no equity and are paying thousands in interest each month, think about getting out. There are alot of other investments you can throw thousands of dollar into each month that will give you better returns than waiting for the housing market to recover.

I know there is the whole interest deduction and pride of ownership thing to factor in . . . but when many people pencil it out . . . it might be a better financial move to default and rent.

 

Default on a mortgage and try to get financing for anything ever again, especially in this environment. People with good credit are being turned down. If you have a major blemish, you're not only limited in how much you can get, but your interest rates will be ridiculous.

And on a moral basis, defaulting on a mortgage when you have other options is plain wrong. If you make a promise, you fulfill it.

 

it goes away after 7 years, doesn't it?

 

I think that's bankruptcy. However, any cursury google check can find it out. Search home property records and you'll see if a bank took possesion of a home you once owned.

Again, the lack of a moral consideration here is stunning.