Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 11-12-2011, 12:41 PM   #21
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by TromboneAl View Post
I think I can explain it. He didn't mean to say this

"my home is underwater and as a result our monthly mortgage payment is getting harder and harder to pay."

Perhaps he meant to say this:
Our mortgage payment is getting harder and harder to pay. We would like to sell our house and buy a cheaper one (or maybe refinance), but because we owe more than the house is worth, those options are unattractive or unavailable. Perhaps those options will be better when prices have improved. When do you wise people think that will happen?

P.S. my Shift key is broken.
Much better. Thanks for the clarification, and also for using the shift key.
__________________

__________________
MichaelB is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 11-12-2011, 12:43 PM   #22
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas Hill Country
Posts: 42,134
Al, it would be nice if the OP posted again to clarify the questions everyone has regarding his intent, but I doubt it will happen. His track record is one of starting a thread and rarely posting to the thread again. Not sure why...
__________________

__________________
Numbers is hard

When I hit 70, it hit back

Retired in 2005 at age 58, no pension
REWahoo is offline   Reply With Quote
Old 11-12-2011, 01:22 PM   #23
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
Quote:
Originally Posted by Lakewood90712 View Post
P.S. If you are fishing for folks on this forum to say " Go ahead , default , cuz everyone else is " I don't think so.
Eh, WTH, I'll say it.

You and the bank entered into a contract. They loan you money and you pay them over 15/20/30 years. If you default on the contract, the bank gets a house.

BOTH the bank and you are at risk. The bank took a risk that you may default. Their collateral is the house. Unless something was fraudulent, such as an inflated appraisal or a broker/applicant falsifying income, then it's a simple business agreement.

==> You do X, you get Y. You fail to do X, we get Y; your credit is penalized and you possibly get a 1099 for forgiveness of debt.

The bank and you shouldn't expect housing values to increase all the time. They should've demanded more down payment. You shouldn't have bought more house than you could afford or taken that ARM or whatever.

In the end, it's a business agreement. Treat it like one.
__________________
eridanus is offline   Reply With Quote
Old 11-12-2011, 01:35 PM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Amethyst's Avatar
 
Join Date: Dec 2008
Posts: 5,899
To respond to the OP's question, "When will my home's value go up?"

If I knew what housing prices would do, I would be very, very wealthy. Even real estate agents, who know the local markets better than anybody, can get fooled into making bad investments.

Look at your area. Is it growing? Are there lots of jobs, or likely to be lots of jobs in future? Are the surroundings beautiful and desirable? Are the schools first rate? In short, do many people want to live there? If any of these is true, and if you take good care of your home, then the value of your property is likely to rise over time. Probably not at "bubble" or "boom" rates, but you'll notice some appreciation.

Good luck with the payments. Life can really suck sometimes.

Amethyst
__________________
If you understood everything I say, you'd be me ~ Miles Davis
'There is only one success to be able to spend your life in your own way. Christopher Morley.
Amethyst is offline   Reply With Quote
Old 11-12-2011, 02:10 PM   #25
Recycles dryer sheets
Nova's Avatar
 
Join Date: Apr 2010
Posts: 270
The OP hasn't explained his situation, but I am wondering if he got one of those "creative financing" mortgages with particularly low payments during the first few years. That could have allowed him to get into more house than he could afford. As the loan resets per the documentation (read that as becomes less "creative financing"), the OP may be struggling to make his higher mortgage payments. Under these conditions, the borrower finds himself with a double-whammy. He may not want to "walk" on his commitments, but he may not be able to afford to make the higher payments. Just speculating...
__________________
Nova is offline   Reply With Quote
Old 11-12-2011, 02:17 PM   #26
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,132
Quote:
Originally Posted by dooo42 View Post
my home is underwater and our monthly mortgage payment is getting harder and harder to pay. my wife are i trying to decide what we should do if we can' t afford our house anymore. i heard it may take ten years for homes values to recover. in your honest opinion, when do you think the home values will go back up?

thanks
Quote:
Originally Posted by MichaelB View Post
Quote:
Originally Posted by dooo42 View Post
my home is underwater and my wife are i trying to decide what we should do with it if the price doesn't rebound in the next few years. i heard it may take ten years for the homes to recover. in your honest opinion, when do you think the home values will go back up?

thanks
Why do you need to do something? Do you and your wife need to relocate?
Quote:
Originally Posted by Nova View Post
The OP hasn't explained his situation, but I am wondering if he got one of those "creative financing" mortgages with particularly low payments during the first few years. That could have allowed him to get into more house than he could afford. As the loan resets per the documentation (read that as becomes less "creative financing"), the OP may be struggling to make his higher mortgage payments. Under these conditions, the borrower finds himself with a double-whammy. He may not want to "walk" on his commitments, but he may not be able to afford to make the higher payments. Just speculating...
I doubt we'll know the issue behind the OP, which, as you can see, was changed after Michael initially quoted it.

I think the OP is simply concerned that his house is under water and wonders when house prices will recover.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 11-12-2011, 02:46 PM   #27
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
TromboneAl's Avatar
 
Join Date: Jun 2006
Posts: 11,199
Quote:
Originally Posted by eridanus View Post
Eh, WTH, I'll say it.

You and the bank entered into a contract. They loan you money and you pay them over 15/20/30 years. If you default on the contract, the bank gets a house.

BOTH the bank and you are at risk. The bank took a risk that you may default. Their collateral is the house. Unless something was fraudulent, such as an inflated appraisal or a broker/applicant falsifying income, then it's a simple business agreement.

==> You do X, you get Y. You fail to do X, we get Y; your credit is penalized and you possibly get a 1099 for forgiveness of debt.

The bank and you shouldn't expect housing values to increase all the time. They should've demanded more down payment. You shouldn't have bought more house than you could afford or taken that ARM or whatever.

In the end, it's a business agreement. Treat it like one.
I see your point, but note that the same argument could be used to justify going into the bank with a gun and holding it up. Just change some wording (for example, "you fail to pull it off, you go to jail," "They should have had better security.").
__________________
TromboneAl is offline   Reply With Quote
Old 11-12-2011, 02:55 PM   #28
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
Quote:
Originally Posted by TromboneAl View Post
I see your point, but note that the same argument could be used to justify going into the bank with a gun and holding it up. Just change some wording (for example, "you fail to pull it off, you go to jail," "They should have had better security.").
One is decided in criminal court. The other is a matter of contract law and possibly civil court. Huge difference.
__________________
eridanus is offline   Reply With Quote
Maybe when i started this thread i wasn't totally clear about my situation.
Old 11-12-2011, 03:05 PM   #29
Recycles dryer sheets
 
Join Date: Jul 2010
Posts: 51
Maybe when i started this thread i wasn't totally clear about my situation.

We bought our house seven years ago during the housing boom and we paid too much..probably like everyone else who is underwater. We have 30 year fixed rate mortgage at 6% which comes out to a whopping $2000 a month. We have a 3 year old son and baby coming on 12-16-2012 and i told the bank i might not be able to afford my mortgage any longer. I just sent out a hardship application to see if i can qualify for a home loan remodification...but i'm not expecting much from the bank. I've looked everywhere to refinance but i can't and my loan isn't owned by freddy mac or fannie may so i can't use obama's plan. I just wanted to know when people think home prices will bounce back so i could try to refinance once i got some equity back. If it is something crazy like ten years and the back won't try to help me, then i'll have to check my options and see what is best for family.
__________________
dooo42 is offline   Reply With Quote
Old 11-12-2011, 03:07 PM   #30
gone traveling
 
Join Date: Apr 2009
Location: Eastern PA
Posts: 3,851
Quote:
Originally Posted by eridanus View Post
The other is a matter of contract law...
For me, that is the crux of any discussion of any loan - be it for a motorcycle, a car, property, or anything else that requires an extended payment period.

You made a contract. You made a commitment.

So the "object of your desires" and the contracted property is not worth as much today as you expected, or wished.

Does that mean you are released from your contract - your obligation?

Unfortunately, there are those today that think so. Their commitment, and word are of little value...

OTOH, would you pay the lending company more if your "property" rose in value while you were paying for it?
__________________
rescueme is offline   Reply With Quote
Old 11-12-2011, 03:13 PM   #31
Thinks s/he gets paid by the post
 
Join Date: Jan 2004
Posts: 2,049
Quote:
Originally Posted by rescueme View Post
You made a contract. You made a commitment.

So the "object of your desires" and the contracted property is not worth as much today as you expected, or wished.

Does that mean you are released from your contract - your obligation?
The contract provides for this. The bank is free to go after the defaulting party in civil court. They should do so if it's in their best interests. If it's not worth it (squeezing blood out of a turnip), they should spend the $5 and send a 1099-C to the defaulting party.
__________________
eridanus is offline   Reply With Quote
Old 11-12-2011, 03:14 PM   #32
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by dooo42 View Post
We bought our house seven years ago during the housing boom and we paid too much..probably like everyone else who is underwater. We have 30 year fixed rate mortgage at 6% which comes out to a whopping $2000 a month. We have a 3 year old son and baby coming on 12-16-2012 and i told the bank i might not be able to afford my mortgage any longer. I just sent out a hardship application to see if i can qualify for a home loan remodification...but i'm not expecting much from the bank. I've looked everywhere to refinance but i can't and my loan isn't owned by freddy mac or fannie may so i can't use obama's plan. I just wanted to know when people think home prices will bounce back so i could try to refinance once i got some equity back. If it is something crazy like ten years and the back won't try to help me, then i'll have to check my options and see what is best for family.
Thanks for coming back and providing additional details. No one knows when housing prices will get back to their previous highs but is will probably not be anytime soon. Do you have any idea of how far underwater (in %) you are?
__________________
MichaelB is offline   Reply With Quote
Old 11-12-2011, 03:16 PM   #33
Moderator
Alan's Avatar
 
Join Date: Jul 2005
Location: Eee Bah Gum
Posts: 21,132
Quote:
Originally Posted by dooo42 View Post
We bought our house seven years ago during the housing boom and we paid too much..probably like everyone else who is underwater. We have 30 year fixed rate mortgage at 6% which comes out to a whopping $2000 a month. We have a 3 year old son and baby coming on 12-16-2012 and i told the bank i might not be able to afford my mortgage any longer. I just sent out a hardship application to see if i can qualify for a home loan remodification...but i'm not expecting much from the bank. I've looked everywhere to refinance but i can't and my loan isn't owned by freddy mac or fannie may so i can't use obama's plan. I just wanted to know when people think home prices will bounce back so i could try to refinance once i got some equity back. If it is something crazy like ten years and the back won't try to help me, then i'll have to check my options and see what is best for family.
Thanks for the clarification, it helps to visualize the scale of your problem. That is a really tough situation, adding a child to the family is equivalent to a big pay cut.

I expect house prices are going to be very specific to where you live. Where we are living they are building quite heavily, both houses and apartment complexes, from what we see on our bike rides. I don't track prices any more as we are renters since shortly before we retired.
__________________
Retired in Jan, 2010 at 55, moved to England in May 2016
Now it's adventure before dementia
Alan is offline   Reply With Quote
Old 11-12-2011, 04:26 PM   #34
Thinks s/he gets paid by the post
Lakewood90712's Avatar
 
Join Date: Jul 2005
Posts: 1,316
Quote:
Originally Posted by dooo42 View Post
We bought our house seven years ago during the housing boom and we paid too much..probably like everyone else who is underwater. We have 30 year fixed rate mortgage at 6% which comes out to a whopping $2000 a month. We have a 3 year old son and baby coming on 12-16-2012 and i told the bank i might not be able to afford my mortgage any longer. I just sent out a hardship application to see if i can qualify for a home loan remodification...but i'm not expecting much from the bank. I've looked everywhere to refinance but i can't and my loan isn't owned by freddy mac or fannie may so i can't use obama's plan. I just wanted to know when people think home prices will bounce back so i could try to refinance once i got some equity back. If it is something crazy like ten years and the back won't try to help me, then i'll have to check my options and see what is best for family.
First thing , if you have not already done so ,get to the tax assessor and get your property tax assesment adjusted down to current value.

Next , If your income is dropping , or you just are so bugged by paying on a mortgage with negative equity , It may be time for a short sale. As long as you are keeping current with payments, the bank , IMHO , will do nothing with a hardship request , or proposed short sale. A 6% note with the money coming in every month is like gold to them.

I suggest you go see a realtor who is sucessfull with short sales, and rent for a few years. Your credit will be dinged big time , but no where near that of a forclosure or BK , and you will normally not get a 1099 for the forgiven debt.
__________________
Lakewood90712 is offline   Reply With Quote
Old 11-12-2011, 04:34 PM   #35
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
There must be more to the situation. Was there a job loss or income loss of some sort?

Starting a new family creates extra expenses. Did it created a situation where you cannot afford the home, or do you have other unexpected expenses?

You are working with the bank to see what you might be able to do with the loan to adjust your budget.

Did you consider looking at all of your family expenses to see where else you might be able to make changes to your spending to improve your family budget?
__________________
chinaco is offline   Reply With Quote
Old 11-12-2011, 05:57 PM   #36
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
Quote:
Originally Posted by rescueme View Post
Really?

I left my prejudices (of other races, of whom I lived/fought as "brothers", in Nam.)

Sorry, I thought you were better than that.

Yeah, I know I'm going to be "centured" by the moderators, but your comment is offensive to me - so be it...

BTW, you have been "promoted" to my ignore list...

There is nothing in haha's post to suggest that he is prejudiced. Those who are not familiar with Cotton Mather might be interested in the following.

"Cotton Mather, FRS (February 12, 1663 – February 13, 1728; A.B. 1678, Harvard College; A.M. 1681, honorary doctorate 1710, University of Glasgow) was a socially and politically influential New England Puritan minister, prolific author and pamphleteer; he is often remembered for his role in the Salem witch trials. He was the son of Increase Mather, and grandson of both John Cotton and Richard Mather, all also prominent Puritan ministers."

Source: Cotton Mather - Wikipedia, the free encyclopedia
__________________
FIREd is offline   Reply With Quote
Old 11-12-2011, 06:31 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Chuckanut's Avatar
 
Join Date: Aug 2011
Location: West of the Mississippi
Posts: 6,337
When my home increased in value, I never gave a thought to paying the bank more interest or give them a percentage of the gain. It was mine to keep. We both honored our contract. Now that the price has gone down, I would not expect the bank to take a loss, assuming I can make the payment. I think contracts should be honored.
__________________
The worst decisions are usually made in times of anger and impatience.
Chuckanut is offline   Reply With Quote
Old 11-12-2011, 07:03 PM   #38
Full time employment: Posting here.
 
Join Date: Dec 2010
Location: Southern California
Posts: 916
OP - if you are unable to meet the 2k a month payment with the new addition (congrats on the addition) next month, you have to consider all your options. Depending on your location location location, I doubt much will happen within the next 5 + years, but really depends on your neighborhood, etc.

While I know others have comments on personal obligations and commitment to contract/mortgage, it has to be mutually beneficial. While it can damage your credit rating, etc. its life. I view it as a form of tax loss harvesting or a divorce or borrowing from a family member and never paying back (just joking).

The issue is can you obtain comparable/suitable housing at an affordable price until you rebuild your credit, depending on your Income potential, you could ride it out or rent until you qualify to buy again.
__________________
Aiming_4_55 is offline   Reply With Quote
more clarification about my post...
Old 11-12-2011, 10:00 PM   #39
Recycles dryer sheets
 
Join Date: Jul 2010
Posts: 51
more clarification about my post...

right now according to a 2010 assessment done by my town i live in (portsmouth, RI) i'm underwater by almost $60,000. We owe $297,000, zillow has it at 257,000 and our town has it at 233,000. I don't even know how they assessed my home without coming inside. We have done tons of work around the house in 7 seven years....painted the outside, put in a nice wooden front door in, renovated the downstairs bathroom, new appliances, new plumbing, tankless hot water heater, we are the middle of our kitchen renovation...etc...maybe when the kitchen is done i should have a new appraisal done. We have cut expenses in a few places: delayed buying new cars, got rid of cable and put an antenna on the home, cut back on groceries..etc.. We aren't losing income we may just not have enough. To tell you the truth, i don't want to be paying a $2000 mortgage for 30 years because it take so much money away from other things we could use it for. I'll wait to see what the bank says and then decide....maybe i'll ask my neighbor a few questions since she's a real estate lawyer. thanks for the input everyone.
__________________
dooo42 is offline   Reply With Quote
Old 11-12-2011, 10:10 PM   #40
Thinks s/he gets paid by the post
FIRE'd@51's Avatar
 
Join Date: Aug 2006
Posts: 2,322
Quote:
Originally Posted by dooo42 View Post
To tell you the truth, i don't want to be paying a $2000 mortgage for 30 years because it take so much money away from other things we could use it for. I'll wait to see what the bank says and then decide....
Are you saying you want to refinance at the current low interest rates in order to reduce your monthly payment, but the bank won't let you because you are underwater?
__________________

__________________
I'd rather be governed by the first one hundred names in the telephone book than the Harvard faculty - William F. Buckley
FIRE'd@51 is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
One Year Homes yakers Travel Information 37 12-07-2011 01:35 PM
Refinance rules change for some underwater mortgages MichaelB FIRE and Money 89 10-31-2011 11:13 AM
We're #1! REWahoo Other topics 31 09-09-2011 03:57 PM
New York Times Article addressing the Housing Slump nico08 FIRE and Money 14 07-12-2011 03:20 PM

 

 
All times are GMT -6. The time now is 09:01 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.