Foreclosure vs. short sell vs. waiting out the storm ....

[Lilith]

Cara, thanks for pointing this out: we''re a dual-income family, but our incomes and our places in life are not commensurate. He''d been working for 5 years+ longer than me, had more in the way of savings, and, yes, was earning about 3 times as much. I actually feel a little embarrassed about that in this conversation, sort of like I''m setting the cause of equality back by benefiting from/being dependent upon my husband. It''s something we argued about a lot more at the beginning of our relationship, way before we got married, and he kept saying we, we, we (not quite like one of the 3 little piggies) until I got used to the idea that in a relationship, you pool your resources. It didn''t quite seem fair or practical to make him live in something that someone earning just my salary could afford - like, hey, welcome back to being just out of college! Enjoy! - but now I wonder if I ought to have.

You are, by the way, quite right about his job prospects. He''s good at what he does, but it''s a small field, and no one is hiring right now. It''s just too risky to quit.

Haven, it''s a good enough suggestion *to* be seconded - we''re definitely going to be looking into this. I hope that they will be as generous as your friend''s company!

NEL, honestly, I''m appreciating each and every person who posts on this topic because, seriously, it''s both providing great advice on this situation (and, yeah, even a chorus of "Rent! Rent! Rent!" is useful, because it drowns out the part of me that is all "The market will NEVER recover and we will just bleed ourselves dry holding onto the house"), and because it''s giving me food for thought for the future. I honestly thought most people lived according to reasonable predictions of their joint salary: it never occurred to me that most people are on the lookout for mortgages that can be met by a single earner ....

Steph, your husband''s company sounds ... amazing. I will *definitely* be talking to my husband about this: his company is covering the moving expenses and giving us a budget for incidentals that I thought was fairly generous (you know, all things considering), but it''s starting to sound like chump change compared to what you guys are describing ....

Rock, we are on it now ... have been for 2 months, but they didn''t respond to us until we deliberately missed a mortgage payment. And now, they''re saying it will take a minimum of 60-90 days for them to reach a decision ... by which time, we will have moved, and it won''t be our primary residence. We might still get some kind of loan modification, god willing, but by that point, we won''t qualify for the Obama plan.

Italia, thank you for sharing your expertise ... that makes it sound like much less of a "sure thing" than I''d hoped. I had kind of been under the impression that, whereas foreclosure had used to mean individual-screwed-by-bank, now, with falling home prices, as often as not it was bank-screwed-by-individual (and had actually been feeling quite a bit of guilt over that possibility), making a short-sell in everybody''s best interests. That ... changes things a bit.

Between your advice and general research, it is starting to look like our best bet is to rent (and, uh, pray), and to hope that the bank will renegotiate the loan terms so that we *can* rent at a decent price, and just hold onto the house to wait it out. I appreciate each and every word: it''s either been informative, or it''s made me think pretty hard about some significant issues in my marriage, or both.

 

[iheartscience]

I have a bit of vicarious experience with short sales. The house my husband and I are about to close on was all hinging on the current owner being able to purchase a short sale house that she wanted. I did some research and found an article that said only about 20% of short sales go through, because banks would rather keep the house on the books as a good asset for as long as possible.

Waiting for a house to go into foreclosure allows the bank to claim it as a good asset for at least a year, sometimes more, even though they lose a lot more money that way. The article said it costs banks about $50k in legal fees alone to deal with a foreclosure. That was a few months ago, though, so hopefully things have changed since then and banks are allowing more short sales.

As for us, the owner of the short sale house ended up getting an inheritance, so she got her mortgage up to date with the inheritance money and sold the house as a regular sale. It didn''t seem like the short sale was going to happen other wise. We had a contingency contract for about 2.5 months until that happened.

I think a lot of people could stand to be a lot less smug. There are no guarantees-even if you pay cash for a house you could still end up upside down. I think you should do whatever is best for you, no hair shirt necessary.

 

[TravelingGal]

Date: 7/30/2009 11:56:04 PM
Author: thing2of2
I have a bit of vicarious experience with short sales. The house my husband and I are about to close on was all hinging on the current owner being able to purchase a short sale house that she wanted. I did some research and found an article that said only about 20% of short sales go through, because banks would rather keep the house on the books as a good asset for as long as possible.

Waiting for a house to go into foreclosure allows the bank to claim it as a good asset for at least a year, sometimes more, even though they lose a lot more money that way. The article said it costs banks about $50k in legal fees alone to deal with a foreclosure. That was a few months ago, though, so hopefully things have changed since then and banks are allowing more short sales.

As for us, the owner of the short sale house ended up getting an inheritance, so she got her mortgage up to date with the inheritance money and sold the house as a regular sale. It didn''t seem like the short sale was going to happen other wise. We had a contingency contract for about 2.5 months until that happened.

I think a lot of people could stand to be a lot less smug. There are no guarantees-even if you pay cash for a house you could still end up upside down. I think you should do whatever is best for you, no hair shirt necessary.

Nope. Upside down means you owe more than the house is worth. You pay all cash, it''s possible you might lose money for yourself, but you are not upside down. You would simply not be in a position where you would have the kinds of choices that lilith is making now.

 

[TravelingGal]

Date: 7/30/2009 8:34:02 PM
Author: Lilith

Date: 7/30/2009 3:55:50 PM
Author: TravelingGal

I should clarify that when I say ''this mess'', I meant the housing bubble in general and not your situation.

I think anyone could be in your situation. I also think everyone who got caught up in the housing mess thinks their situation is sympathetic.

I do think though that if things were truly WELL thought out, it would be tough to be in the mess you are in. My husband and I are looking to find a home we can afford for some time with only one salary, and in a pinch even if we BOTH lost our jobs (this is assuming we could get unemployment). We don''t make a TON of money, but we are probably urban professionals like you and your DH are. If we were in your situation, my husband would just get laid off and would find work here and we''d make the payments while he finds another job. If the company really wanted him and wanted to transfer him, we would discuss with them the house situation and either get the to give him a bonus making up any differences or a monthly allowance to help.

Death of one us? We''ll make sure to get life insurance. Divorce? That''s the only real sticky situation I can see, and we''d just have to grit teeth and figure that one out, but I am a big believer that marriage is lots of hard work, and so is he.

I''m not saying this to judge you - in fact, you yourself said you need to educate yourself...I''m not sure how much you were educated when you made the decision to buy a condo in 2006. If you read the thread where PP talks about her experiences, I think I said there that even though I don''t agree with it from a moral standpoint, at some point you have to do what makes financial sense for you. Yes, as a whole it annoys me that a lot of people are doing it with little regard to what happens to the system, but most people aren''t concerned with the system - they are in the end only concerned with themselves. And that''s normal.

Oh, I know, and I''m not taking it too personally - if I were to, frankly, I''d be acting like an idiot, since I did put myself out there in order to get the advice. But, here''s the thing ....

... I kind of think you''re indulging in a false sense of security. I think *anyone* who thinks they have all their bases covered for the next 5 to 10 years is, just because ... things change. I''m not saying that in some kind of stupidly ominous way, or to try to engender sympathy. It''s just ... best-laid plans of mice and men, y''know?

When we bought this house, we were planning to stay for at least 6 years, probably much, much longer. And, having to leave now ... well, the house is the least of our worries: this is torpedoing my career, and to say that I''m heartbroken is putting it mildly.

While I''m fairly poorly educated on fiscal terminology, I generally tend to play things safe. With the plans we had, everything would have worked out well. It''s not any one thing that sank us, because we did plan for emergencies: it was the combination of spousal transfer in a job where they damn well promised they wouldn''t do that + crap economy where he can''t get another job in his field right now (yes, we looked) + expanding family. We can''t take the risk of his having to switch professions right now.

This isn''t to say that I might not be stupid. Trust me, I feel really, really stupid right now, and I keep replaying history in my head, trying to figure out what I could/should have done differently, where I should have put my foot down, in order to change how things have played out. This is just to say, while it''s great to plan ahead and try to cover all your bases ... it''s sort of the nature of the beast that sh*t will happen anyway, and then you need to cope. So, here''s me, figuring out my game plan for coping, in full awareness that no matter how good of a plan I come up with (all together now), things might not work the way I plan ....

I can understand the best laid plans can go awry. I''m also sorry to hear you are heartbroken over your career.

As I said, no one has a crystal ball. Study the market now, make your best guess and run with it. It''s all anyone can do anyway. We''re coming to a fork in the road ourselves in the next 5-6 months and I will have to make my best educated guess as well.

My guess is that in areas like yours and mine, it''s going to come down another 10% in the next 1-2 years. And I''m one of the more bullish forecasters in the blogworld! I think people will have a better idea based on what happens this winter in the housing market.

 

[Rock_of_Love]

Date: 7/30/2009 11:21:30 PM
Author: Lilith

Rock, we are on it now ... have been for 2 months, but they didn''t respond to us until we deliberately missed a mortgage payment. And now, they''re saying it will take a minimum of 60-90 days for them to reach a decision ... by which time, we will have moved, and it won''t be our primary residence. We might still get some kind of loan modification, god willing, but by that point, we won''t qualify for the Obama plan.

Good luck to you with this!! My advice is just to bug them like crazy...make it a point to call every 3-5 days and ask what the status is, reaffirm your hardship and your inability to make payments as they are now, etc. etc. They should be evalutating you for the Obama plan right NOW, so you shoudl be okay. It is not like they are going to know right when you move.

If you need any help with this, I''d be happy to give you some more specific advice...if you like, ask the mods for my email.

If you get loan mod through, this will really help with your rental situation - then your property really will become more of an investment for the long term and you''ll be able to stick it out for when properties rebound.

 

[fleur-de-lis]

Hey Lilith, it just struck me that a pretty big issue based on the facts related hasn''t been asked yet.

Since this was a house you planned on staying in for a while, and you''re moving for a job prospect that wasn''t an affirmative choice, and it sounds like you''d want to stay in the area if only the job market were better so that your husband would be able to get a different job... well, if the employment market were to improve in 2 years'' time, would you want to stay in the new locale? Or would you see yourself likely missing SoCal and trying to get back if new employment in your husband''s industry in 2011 were available in SoCal again?

(To illustrate, when a friend''s family moved from the East Coast to CA for a job, they sold the old house and looked forward to the new life. Ten years later, the CA job market collapsed and his father took a position in TX; not being thrilled about TX, they held onto the CA residence, rented it out, and figured they''d go to TX for a few years to ride out the recession but eventually return to SoCal. They did indeed return to SoCal after a few years, and were glad that their old house was there to come home to after giving the tenants 60 days notice.)

 

[Lilith]

Date: 7/30/2009 11:56:04 PM
Author: thing2of2
I have a bit of vicarious experience with short sales. The house my husband and I are about to close on was all hinging on the current owner being able to purchase a short sale house that she wanted. I did some research and found an article that said only about 20% of short sales go through, because banks would rather keep the house on the books as a good asset for as long as possible.


Waiting for a house to go into foreclosure allows the bank to claim it as a good asset for at least a year, sometimes more, even though they lose a lot more money that way. The article said it costs banks about $50k in legal fees alone to deal with a foreclosure. That was a few months ago, though, so hopefully things have changed since then and banks are allowing more short sales.


As for us, the owner of the short sale house ended up getting an inheritance, so she got her mortgage up to date with the inheritance money and sold the house as a regular sale. It didn''t seem like the short sale was going to happen other wise. We had a contingency contract for about 2.5 months until that happened.


I think a lot of people could stand to be a lot less smug. There are no guarantees-even if you pay cash for a house you could still end up upside down. I think you should do whatever is best for you, no hair shirt necessary.

Huh, interesting. This whole thread is teaching me a lot about "bank logic," which doesn''t seem to bear a whole lot of relation to what I think of as being actually ... logical. I wonder how that works, though: I mean, if the house will only sell for $350,000 in a short sale, isn''t that it''s new value? Do they get to just keep saying, nope, it''s $450,000, even if that bears no relationship to reality? (And whom are they saying it *to?* The IRS doesn''t seem to make sense ... their stockholders? I feel like I am making the confused face dogs make when you give them a command that is too complex, like saying "Sit!" while you make a stick-throwing motion ....) That seems sort of like an extension of the kind of shenanigan that got us into this whole mess in the first place ... unless I am misunderstanding, which I hope I am.

Thanks for explaining that, though, and I''m really glad that you got your house. And thank you, honestly, for the sympathy. It means a lot.

 

[Lilith]

TGal, thanks. I think you''re right, it is going to go down a bit more ... we''ve already had our tax value on the house readjusted once since we bought, and I''ll bet that it happens again in the near future. It makes for an interesting experience, trying to predict on the basis of the recent past! If I were to do that strictly, I think I''d just pull the covers over my head and cower ....

Rock, you give awesome advice - thank you! I thought that was what we *weren''t* supposed to do (like pissing off a college admissions board by bugging them, "How about now? Do you know now?"). As soon as I finish posting, next call will be to the bank. I may very well take you up on your offer - thank you, most sincerely.

Fleur, that''s a good question, but one with a bad answer, unfortunately: the only reason I''d want to stay out here would be my job, and by the time that the economy recovers enough for my husband to get a spot out here, I think my job will be long-gone. I like SoCal a lot, but not enough that I''d insist on returning if all other things were equal out there ... so, here''s hoping I can find another job in *my* field! Your friend''s situation sounds ideal and well-planned out - I think if we were to follow suit, our "happy ending" would be to be able to hold onto the house long enough to sell it and make back what we paid in the first place. But thanks for raising it! You''re a nice person. (Now I sound like Will Ferrell in "Elf," but, seriously, that''s a kind thing to think of in this context.)

 

[fleur-de-lis]

Date: 7/31/2009 2:07:34 PM
Author: Lilith


Fleur, that''s a good question, but one with a bad answer, unfortunately: the only reason I''d want to stay out here would be my job, and by the time that the economy recovers enough for my husband to get a spot out here, I think my job will be long-gone. I like SoCal a lot, but not enough that I''d insist on returning if all other things were equal out there ... so, here''s hoping I can find another job in *my* field! Your friend''s situation sounds ideal and well-planned out - I think if we were to follow suit, our ''happy ending'' would be to be able to hold onto the house long enough to sell it and make back what we paid in the first place. But thanks for raising it! You''re a nice person. (Now I sound like Will Ferrell in ''Elf,'' but, seriously, that''s a kind thing to think of in this context.)

My pleasure, you''re very nice yourself. (Heh heh, I suppose I just said "Smiling''s my favorite!" myself there, didn''t I?) And it''s not at all a bad answer, BTW. It had struck me that in the midst of all this financial, number-crunching talk that one shouldn''t overlook the human/emotional side as well. Hardships/frustrations are easier to endure with grace if they align with the big picture goals of what you would do if money were not involved. If you''re feeling you''re done, you''re done... and it might be important to consider that in your calculations. If the only reason you''re paying a $500 shortfall each month and dealing with the stress of long-distance landlording is that you''re betting on a return, you''ll be more likely to acutely feel the frustrations of having this albatross from the soon-to-be past life hanging around your necks than if you felt holding on to it aligned with your personal, heartfelt long-term goals, you know?

 

[Mara]

Lilith re: the short sales, I know a bunch of people who are trying to get in on some deals that way and have not been able to get a short sale yet. One of them has tried FIVE times. The other one is on their third attempt. Even redfin says on their site they don''t recommend them (or give comms on them?) because the chances of you getting it are so slim. It''s a little depressing, like why bother? But yeah if you can do it, it can be a good thing depending.

 

[MichelleCarmen]

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady


Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we'd be in the housing mess we are in now.

One mom from my kids' school put $100K down on a house she paid $360K for and now cannot sell it. It's been on the market for months and months and *if* it sells for what she is asking (around $339K), she's going to loose a bit chunk of her deposit. Before the market crashed, she bragged to me on multiple occasions about how smart they were. Now they're stuck because of all the NINJA (or whatever) loans. The mom/family moved to 5 hours away and have to rent while hoping their house sells. Putting money down doesn't guarantee much of anything, IMO.

The only debt I have is my car pmt. My husband's truck is paid off. Not having any debt is a HUGE burden off my back! Even though we are considering putting an offer on the house we're renting, in some ways, I kind of don't want to deal with the obligation all over again.

Owning a home is debt. It seems to me, some people don't see it that way. . .or possibly I'm mistaken.

 

[TravelingGal]

Date: 7/31/2009 2:57:28 PM
Author: MC

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady


Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we''d be in the housing mess we are in now.

One mom from my kids'' school put $100K down on a house she paid $360K for and now cannot sell it. It''s been on the market for months and months and *if* it sells for what she is asking (around $339K), she''s going to loose a bit chunk of her deposit. Before the market crashed, she bragged to me on multiple occasions about how smart they were. Now they''re stuck because of all the NINJA (or whatever) loans. The mom/family moved to 5 hours away and have to rent while hoping their house sells. Putting money down doesn''t guarantee much of anything, IMO.

The only debt I have is my car pmt. My husband''s truck is paid off. Not having any debt is a HUGE burden off my back! Even though we are considering putting an offer on the house we''re renting, in some ways, I kind of don''t want to deal with the obligation all over again.

Owning a home is debt. It seems to me, some people don''t see it that way. . .or possibly I''m mistaken.

Actually, it helps a few things.

People who put 100K down have harder time walking away from their house. People walking is a lot of what is causing their mess. Sales have picked up because most of the sales (at least in certain areas of Cali) are foreclosure sales.

Second, people who put 100K down may LOSE money, but they are not (at least yet) in a position where they can''t afford to pay back the bank. They still most likely have some equity in the home. Of course, in California, plenty of homes have lost a 100K in value so that''s no guarantee. However those people still think twice before walking away.

Losing money you do have is a titch easier than losing money you don''t have. Or should I say, a little less scary.

We will hopefully have a 100K to put down. But in Ca''s RE market, it''s so volatile that we are hesitate to put the money down and buy now because I''m pretty sure that DP will go poof.

 

[NewEnglandLady]

Date: 7/31/2009 2:57:28 PM
Author: MC

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady


Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we'd be in the housing mess we are in now.

One mom from my kids' school put $100K down on a house she paid $360K for and now cannot sell it. It's been on the market for months and months and *if* it sells for what she is asking (around $339K), she's going to loose a bit chunk of her deposit. Before the market crashed, she bragged to me on multiple occasions about how smart they were. Now they're stuck because of all the NINJA (or whatever) loans. The mom/family moved to 5 hours away and have to rent while hoping their house sells. Putting money down doesn't guarantee much of anything, IMO.

The only debt I have is my car pmt. My husband's truck is paid off. Not having any debt is a HUGE burden off my back! Even though we are considering putting an offer on the house we're renting, in some ways, I kind of don't want to deal with the obligation all over again.

Owning a home is debt. It seems to me, some people don't see it that way. . .or possibly I'm mistaken.

At least by putting the $100K down, it's kept your friend from going upside down. Yeah, she's lost some equity, but even if she sells the house for $339K, she can still walk away from the deal with $80K in cash. Heck, she's fared better with her house than I've fared in the market. Taking out any type of loan is a risk (which is why being completely debt-free would be ideal), but she's much, much better off than somebody who only put $10K or $20K down.

 

[zhuzhu]

I think the true value of owning a home is entirely defined by one''s perception. Some considers it a pride and joy, some considers it simply as a purchase - a burden and debt. Unless you can see positive emotional value in owning a home it would be foolish to buy.


Likewise, once you bought a home that you love, you will do everything you can to protect and cherish it, regardless of the "investment value" of it all.

 

[iheartscience]

Date: 7/31/2009 2:54:59 AM
Author: TravelingGal

Date: 7/30/2009 11:56:04 PM

Author: thing2of2

I have a bit of vicarious experience with short sales. The house my husband and I are about to close on was all hinging on the current owner being able to purchase a short sale house that she wanted. I did some research and found an article that said only about 20% of short sales go through, because banks would rather keep the house on the books as a good asset for as long as possible.

Waiting for a house to go into foreclosure allows the bank to claim it as a good asset for at least a year, sometimes more, even though they lose a lot more money that way. The article said it costs banks about $50k in legal fees alone to deal with a foreclosure. That was a few months ago, though, so hopefully things have changed since then and banks are allowing more short sales.

As for us, the owner of the short sale house ended up getting an inheritance, so she got her mortgage up to date with the inheritance money and sold the house as a regular sale. It didn''t seem like the short sale was going to happen other wise. We had a contingency contract for about 2.5 months until that happened.

think a lot of people could stand to be a lot less smug. There are no guarantees-even if you pay cash for a house you could still end up upside down. I think you should do whatever is best for you, no hair shirt necessary.

Nope. Upside down means you owe more than the house is worth. You pay all cash, it''s possible you might lose money for yourself, but you are not upside down. You would simply not be in a position where you would have the kinds of choices that lilith is making now.

My apologies for the incorrect terminology. I meant that even if you pay cash for a house, you could still end up with a house that''s worth $100k less than what you paid for it due to the housing market crash.

 

[iheartscience]

Date: 7/31/2009 1:53:36 PM
Author: Lilith

Date: 7/30/2009 11:56:04 PM

Author: thing2of2
I have a bit of vicarious experience with short sales. The house my husband and I are about to close on was all hinging on the current owner being able to purchase a short sale house that she wanted. I did some research and found an article that said only about 20% of short sales go through, because banks would rather keep the house on the books as a good asset for as long as possible.

Waiting for a house to go into foreclosure allows the bank to claim it as a good asset for at least a year, sometimes more, even though they lose a lot more money that way. The article said it costs banks about $50k in legal fees alone to deal with a foreclosure. That was a few months ago, though, so hopefully things have changed since then and banks are allowing more short sales.

As for us, the owner of the short sale house ended up getting an inheritance, so she got her mortgage up to date with the inheritance money and sold the house as a regular sale. It didn''t seem like the short sale was going to happen other wise. We had a contingency contract for about 2.5 months until that happened.

I think a lot of people could stand to be a lot less smug. There are no guarantees-even if you pay cash for a house you could still end up upside down. I think you should do whatever is best for you, no hair shirt necessary.

Huh, interesting. This whole thread is teaching me a lot about ''bank logic,'' which doesn''t seem to bear a whole lot of relation to what I think of as being actually ... logical. I wonder how that works, though: I mean, if the house will only sell for $350,000 in a short sale, isn''t that it''s new value? Do they get to just keep saying, nope, it''s $450,000, even if that bears no relationship to reality? (And whom are they saying it *to?* The IRS doesn''t seem to make sense ... their stockholders? I feel like I am making the confused face dogs make when you give them a command that is too complex, like saying ''Sit!'' while you make a stick-throwing motion ....) That seems sort of like an extension of the kind of shenanigan that got us into this whole mess in the first place ... unless I am misunderstanding, which I hope I am.

Thanks for explaining that, though, and I''m really glad that you got your house. And thank you, honestly, for the sympathy. It means a lot.

I''m pretty sure the article said that the banks are showing the house as a good asset to the shareholders, and I suppose they can also use the good assets as equity to get more $. And since the houses the banks hold the mortgages for don''t get reappraised they can still pretend the house is worth $450k even though it''s really only worth $350k now.

I wish I knew where I read the article...I have absolutely no idea, though! If my memory is jogged somehow I''ll post a link.

 

[Dancing Fire]

Date: 7/31/2009 2:57:28 PM
Author: MC

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady


Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we''d be in the housing mess we are in now.

One mom from my kids'' school put $100K down on a house she paid $360K for and now cannot sell it. It''s been on the market for months and months and *if* it sells for what she is asking (around $339K), she''s going to loose a bit chunk of her deposit. Before the market crashed, she bragged to me on multiple occasions about how smart they were. Now they''re stuck because of all the NINJA (or whatever) loans. The mom/family moved to 5 hours away and have to rent while hoping their house sells. Putting money down doesn''t guarantee much of anything, IMO.

yes it does....
the sad truth is that people with no money down cause this housing mess that we see today.since they have nothing invested in their home it''s a no brainer for them to walk away. this is what''s been happening in the past 2 years,if the law had required a 15-20% dp on all home purchases that would of eliminated all the 0 down buyers. by eliminating these 0 down buyers we wouldn''t have a housing bubble of 2006.

 

[MichelleCarmen]

Date: 7/31/2009 3:17:43 PM
Author: NewEnglandLady

Date: 7/31/2009 2:57:28 PM
Author: MC

Date: 7/30/2009 5:18:00 PM
Author: NewEnglandLady


Renting is definitely not bad for the economy, in fact if more people had rented and not bought until they had at least 20% down, I seriously doubt we''d be in the housing mess we are in now.

One mom from my kids'' school put $100K down on a house she paid $360K for and now cannot sell it. It''s been on the market for months and months and *if* it sells for what she is asking (around $339K), she''s going to loose a bit chunk of her deposit. Before the market crashed, she bragged to me on multiple occasions about how smart they were. Now they''re stuck because of all the NINJA (or whatever) loans. The mom/family moved to 5 hours away and have to rent while hoping their house sells. Putting money down doesn''t guarantee much of anything, IMO.

The only debt I have is my car pmt. My husband''s truck is paid off. Not having any debt is a HUGE burden off my back! Even though we are considering putting an offer on the house we''re renting, in some ways, I kind of don''t want to deal with the obligation all over again.

Owning a home is debt. It seems to me, some people don''t see it that way. . .or possibly I''m mistaken.

At least by putting the $100K down, it''s kept your friend from going upside down. Yeah, she''s lost some equity, but even if she sells the house for $339K, she can still walk away from the deal with $80K in cash. Heck, she''s fared better with her house than I''ve fared in the market. Taking out any type of loan is a risk (which is why being completely debt-free would be ideal), but she''s much, much better off than somebody who only put $10K or $20K down.

Yeah, we''ll see what it sells for. . .I just checked again (it''s been a few weeks) and the price has been reduced to $329K. . .it''s been on the market 85 days. She won''t make $80K because she has to pay commission and she''s selling it at a lower price than what would grant her $100K before commission. When it was first on the market, I had calculated and at $339K after commission, she''d would have lost $50K of her original $100K. That''s a pretty large chunk of money!

Also, she isn''t in my neighborhood. There are three house neighborhoods and one condo neighborhood in my sons'' school and her neighborhood has had houses up for sale and none of them have sold. A few ended up being rented and one went into foreclosure.

 

[MichelleCarmen]

Date: 7/31/2009 3:21:01 PM
Author: zhuzhu
Likewise, once you bought a home that you love, you will do everything you can to protect and cherish it, regardless of the ''investment value'' of it all.

Yep, I agree. A couple of my friends do not have any equity in their homes (and have lost money since their homes have gone down more than they paid), but love them so much, they could care less and couldn''t bear to part with their homes regardless.

We''re renting right now and are stuck as to what to do. We have a 1-year lease and would like to decide before the end of that as to whether or not to buy. We''re not "emotionally" attached to the home. . .I refuse to be while renting. We''ll stay here even if it means renting for 10 years. I''m not going to pay more than current market value.