Would like your thoughts....hypothetical situation. You buy a house

[Texacon]

Oh My God.  This is just unbelievable.  I can not believe it.

Thickasabrick  (1000+ posts)     

Sat Feb-21-09 01:50 PM
Original message

Would like your thoughts....hypothetical situation. You buy a house
during the housing bubble. You still have a job, can afford the payment but when housing prices start to fall you realize you made a bad investment and you are "underwater" on your mortgage.

Should you walk away and stick the bank with your bad investment? I am not talking about sub prime here. I'm talking about a normal 30 year mortgage at a reasonable interest rate.
 

Look how some of the DUmmies try to make it out to be ok;

quiller4 (144 posts)     
Sat Feb-21-09 01:55 PM
Response to Original message

5. I wouldn't walk away if I was happy living in the house.
 Over time housing values will rise again. If I were a younger worker with time to wait, I'd keep my house, stay current on my mortgage and protect my credit rating. In the long run my house will slowly appreciate.

Alternatively, I might seek to refinance under one of the options that would allow me to renegotiate my loan at the current market value of my house with conventional financing at today's market rate. That option is part of Obama's housing plan and I just heeeeard Orman explaining it on CNN.

This is NOT your fault .... it is someone elses and it is ok to let the American people pay a mortgage you can afford;

SmileyRose  (1000+ posts)     

Sat Feb-21-09 02:15 PM
Response to Original message

11. This is about accounting, not morals. 
 If you buy a stock and you later realize it's a dud, you drop kick it before you lose your shirt AND your pants. If you buy a car, it turns out to be a lemon and your state has lemon laws, then you dump the problem back on the dealership or manufacturer. Your mortgage company has PROFESSIONAL underwriters that are responsible for assessing the value of the collateral for the life of the loan. These underwriters clearly did not do a good job. A professional knew it was a bubble that could not be sustained for 30 years. You also have to consider the fact your bank would steamroll over you in a heartbeat or less on pure financials. So this is my logic for telling you this is a financial question, not a moral one.



Now, you have a house not worth the paper on it. Your first question is regarding the historical appreciation rates for your local market over the 10 years prior to the bubble. If your house is old enough, look at appreciation rates for the lifetime of the home. You also have to factor in inflation in the past and what is expected over your projected lifetime in the house. An appraisal agent and accountant can help you with that. If you determine you can eventually sell the house for it's inflated price tag and you like the house, and you like and want the house for your personal enjoyment then that will influence your choices.

I would also investigate any provisions in the stimulus (the new laws) and existing local and state laws that may benefit you. What is there that will allow you to renegotiate your loan based on the actual current value of your home? Is there anything that will allow you to give deed in lieu of foreclosure? What impact will this have on your credit history and are you willing to take that hit?

You have a lot of financial information to gather in order to make a sound financial choice on this house. But make no mistake about it, this is a mainly a financial decision. Your personal wants also have to be considered, but IMHO this is mainly a financial decision.

BTW - your home should never be an investment. It is the most cost effective way to keep a roof over your head most of the time, but very seldom does appreciation of residential real estate outpace inflation and ownership costs.
 

I can't watch.  Tell me when it is over.

KC

[Rebel]

These f'n idiots think a bank is just some guy, loaded with money and probably a 'rethug", who they can shaft when they don't get their way. They're too damn stupid to understand that who they're shafting are stockholders, employees, and everyone else that makes that bank go round. 

[djones520]

These f'n idiots think a bank is just some guy, loaded with money and probably a 'rethug", who they can shaft when they don't get their way. They're too damn stupid to understand that who they're shafting are stockholders, employees, and everyone else that makes that bank go round. 

Not to mention his neighbors who also bank there.  It's their money he bought the house with.

[Mike220]

Hypothetical situation: If all the DUmmies and their ilk dropped dead, would anybody be sad?

[jukin]

This is why one used to have to put 15-20% down. I'm sure that the CRA made that an onerous requirement.  You know because if you can't afford to pay a mortgage you sure as hell can't afford to save the 15% down payment. 


IT'S NOT FAIR!!!

[Rebel]

Hypothetical situation: If all the DUmmies and their ilk dropped dead, would anybody be sad?

I'd have to find another hobby.

[Miss Mia]

I'd have to find another hobby.

There's always model cars.   

[The Village Idiot]

These f'n idiots think a bank is just some guy, loaded with money and probably a 'rethug", who they can shaft when they don't get their way. They're too damn stupid to understand that who they're shafting are stockholders, employees, and everyone else that makes that bank go round. 

they know les about banking than Obama?? possibly