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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 14:37:14 GMT -5
I haven't found out otherwise - my real estate is worth much more than I paid, our home cost $50k, now worth $300k. The fact that it was 'worth' $600k for a few weeks in 2006 doesn't alter the fact that I made a 6X return. RE always goes up, just not every week, or every month, or every yr.
I second Phil's statement. I bought my shore place in late 2002 for $129,000. It is currently worth roughly $170,000... in 2005-2007 according to one or two R/E sites it had risen to $270,000.
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 14:45:21 GMT -5
I'd be sending my hard earned $$ monthly to my landlord, making them $$ rather than investing in my future, and have nothing to show for it when I moved out. No thanks.
You are making the classic mistake most middle class individuals make. Rent is merely payment for a service. A service that does not require a large down payment. One does not get locked into a very long term arrangement.
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runewell
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Post by runewell on Feb 1, 2011 14:48:31 GMT -5
I'd enjoy hearing your "long story".
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 14:51:11 GMT -5
I'd enjoy hearing your "long story".
Me too... it is too quiet, and frankly, boring here...
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zibazinski
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Post by zibazinski on Feb 1, 2011 15:00:22 GMT -5
Don't get me started on people who think it's "okay" to get rid of their animals like it's unloading some old furniture. Fact is a house is NOT an investment, it has BECOME one for some reason but that was when people lived in them forever and then sold them after they were paid off to move someplace usually warmer and cheaper (think Florida mobile homes!) I wouldn't want to "lose" money on my home but once it's paid off, who cares if I get less for it than I paid for it? I lived someplace nice and stable for many years. Renters have no stability. I just raised all my rents by $15, $25, and $50 per month and I am actually hoping some of them move so I can update them and get even more rent than my increase. Unless there's a glut of rentals, you are at the mercy of someone like me or any other landlord.
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 15:07:31 GMT -5
Renters have no stability. I just raised all my rents by $15, $25, and $50 per month and I am actually hoping some of them move so I can update them and get even more rent than my increase. Unless there's a glut of rentals, you are at the mercy of someone like me or any other landlord.
The identical post/paragraph could also be written about home owners. I've never enjoyed more stability than I have since 1996 while renting in northern NJ.
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souldoubt
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Post by souldoubt on Feb 1, 2011 15:14:45 GMT -5
I've had plenty of stability as a renter but I'm sure everyone's experience is different. Previous apartment I lived in for about 52 months and rent went up once $50 about 2 years in but this was on a three bedroom place in a nice area about a mile from the beach. After that since rents had declined due to the economy we moved into a place quite a bit bigger and between rent/utilities I'm paying the same as I was at the previous place.
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 15:21:58 GMT -5
Another ominous and severe threat to home owners, and I do feel your pain on this one, is local cities and towns being under extreme financial distress due to rapidly rising personnel budgets with respect to health insurance and pension costs and school budgets. The tax assessor and local politicians have no interest in the financial hardships they cause local residents as they raise property taxes at will. The town I live and rent in, had a 20% tax increase about three years ago. That is anywhere from a $1500 to $3000 increase in property taxes depending on the assessed value of one's home.
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zibazinski
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Post by zibazinski on Feb 1, 2011 15:24:17 GMT -5
Fighting those assessments is what I would be doing. No reason for gov't not to tighten their belts the way everyone else has to. If you are renting, you'd get hit with those increases, trust me.
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 15:28:44 GMT -5
Fighting those assessments is what I would be doing. No reason for gov't not to tighten their belts the way everyone else has to. If you are renting, you'd get hit with those increases, trust me.
Yes, I and the other renter received rent increases. The town is quite small, only one square mile, minimal ratables. We have a fully staffed police and fire departments; and a full public school system through high school. Also a public works. Housing prices in town are very stable. It was not an assessment issue but a tax increase issue.
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zibazinski
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Post by zibazinski on Feb 1, 2011 15:32:43 GMT -5
You must love renting there.
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❤ mollymouser ❤
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Post by ❤ mollymouser ❤ on Feb 1, 2011 15:34:35 GMT -5
If you owe more than the house is worth, I don't know if you will be able to refinance for better terms ~ but I suppose it's worth looking into. If you put BOTH of your bonuses toward the mortgage, how much would that impact what you owe v. what the house is worth? Can you cut other expenses and pay extra toward the mortgage principal for a while, with an eye toward getting it to where you CAN refinance?
As to walking away and a short sale (which I don't recommend) ~ are you living in a recourse or non-recourse state. If you were to try to rent a comparable house, how much would that be v. your current mortgage? Are you willing to rent for 3-4 years until your credit improves enough to consider buying again? Can you rent in a good schools area?
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Post by Savoir Faire-Demogague in NJ on Feb 1, 2011 15:43:41 GMT -5
You must love renting there.
I moved to the town in 1996, when the firm I was with was bought out by a competitor. I found employment in NYC and wanted to live closer to the city. I only moved here because the town has a Path station a short walking distance from all points in town. The rent was dirt cheap. After a short while I realized the other attractions the town offered, in addition to a short commute to the city. I've looked at condos several times, taxes and maintenance fees are too high for my liking. I am very friendly with the family that owns the house and lives on the third floor. I live on a nice street and the neighbors are also friendly. I lucked out.
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Post by bobbysgirl on Feb 1, 2011 15:43:51 GMT -5
(and I didn't sign the refi on our last home. That was my other half - my name's not on that, or this, mortgage so we are looking at what I could do as well)
Why are you worrying if your name is not on any of the paper work? Shouldn't SO be worrying?
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stats45
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Post by stats45 on Feb 1, 2011 15:58:38 GMT -5
This is why I would call buying a home a lifestyle choice plus 'forced savings'. Maybe it should be called 'forced savings linked to real estate price inflation wherever you live'.
Technically, I would say that once you have enough equity in your home that it could be rented at prevailing rental rates higher than your PITI that you have an investment. You are just choosing to use the investment for your own lifestyle rather than generating income. It would be the same as using a work truck for hunting rather than sending it to construction jobs, for example.
This 'Forced savings' and not having a mortgage payment in retirement is a huge portion of wealth and retirement savings for many middle-class families. Some people will do well, and others will not.
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schildi
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Post by schildi on Feb 2, 2011 0:35:52 GMT -5
- but over 25 and 35 yr periods it trends ever upward at 11%/yr. - but over some 25 and 35 yr periods it trended upward at 11%/yr, with no guarantee of that ever repeating.
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schildi
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Post by schildi on Feb 2, 2011 0:48:32 GMT -5
You are making the classic mistake most middle class individuals make. Rent is merely payment for a service. A service that does not require a large down payment. One does not get locked into a very long term arrangement. I don't know if I buy that or not. I think our house has been an awesome investment over the last 11 years since we own it compared to renting. The value has doubled (it was 2.5x sometime in between for a short time), the monthly payment was less than what we would have paid in rent for a smaller house across the street (the one we used to rent), and the mortgage is almost paid off. If we would sell today, we would get back every dollar we paid including insurance and taxes plus a little more. So we have essentially lived here for free for the last 11 years. I know it does not always work out that way, but it did for us.
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Post by bobbysgirl on Feb 2, 2011 1:06:05 GMT -5
It works out like that because your mortgage is not steep. The price of mortgages in the past few years is difficult for me to believe. Lots of people pay over 1000.00 a month. To me, this is a hardship. But, that's just me. I'm thinking people were counting on 2 paychecks forever?
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 2, 2011 12:44:07 GMT -5
That is your opinion. Some people will make a problem for themselves and then instead of recognizing it, just continue to hold on to the problem because they don't want to "lose" money. Life is about choices. I will give stuff away in order to move on with my life. Of course it is my opinion. That's what we are all doing here, right? I agree with you that if you can't afford your house, you should sell and move on. I disagree that if you can afford it but are upside down, you should sell, rent, and try to pay off the shortage. OP is upside down close to 200k. How many decades will it take to pay that off while renting to boot? Is spending the rest of her working years paying off debt on a house she no longer owns a good long-term strategy? I don't think so. As long as OP owns the house, the next market upswing will reduce or eliminate her "upside-downness", right? If she sells, she will not participate in that upswing, she will have locked in her losses.
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 2, 2011 12:51:47 GMT -5
Your comments did not line up with the OP. OP said she paid 400k for the house. You stated she paid 200k. OP said she can't re-fi because she owes more than 125% of the current value. You said she shouldn't have taken out a mortgage for more than the cost of the home, as if her home value hadn't plunged AFTER she bought the house.
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Plain Old Petunia
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bloom where you are planted
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Post by Plain Old Petunia on Feb 2, 2011 15:09:01 GMT -5
No, it was unclear to me what the purchase price was and what the value of the appraisal is now. When the OP was talking 125%, I didn't know what value he/she was referring too in that sense. And, I think I can read and am capable of making my own comments without a coach if you don't mind. OK, well, in her very first post she stated the purchase price was 400k. If that was unclear to you, then you must not have read it, which is pretty much what I said, right?
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Plain Old Petunia
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Post by Plain Old Petunia on Feb 2, 2011 15:58:02 GMT -5
Sorry to have bored you, Snerdley.
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Nazgul Girl
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Post by Nazgul Girl on Feb 2, 2011 20:12:23 GMT -5
Jax, if you want to keep your credit pristine, I would suggest finding out what your monthly principal payment is, (probably a couple/few hundred dollars a month ), and then make two or three extra principal payments per month on your note ( with the notation that the extra payment is to be applied to principal. For example, if the actual principal payment that is made on your $3750 per month note is $450, then send them another $450 with it. That way, you've cut at least one month of a steep interest payment off of your financial lives. Rinse, wash, repeat. Right now, we pay our mortgage weekly ( simplest way for us to have even cash flow through a month, since we get my salary, my husband's s.s. check, his pension, a monthly draw down of his first wife's retirement account ( he was a widower ), a rent check from a rental, rental income from our daughter who just moved back with us to earn a masters degree, and a check from a land contract. Since all land at different time of a month, we have weird cashflow. I always schedule 3 extra principal payments of $170 each to pay down the mortgage, plus extra payments to pay off my car loan. We have very little extra debt at this time, thank God. I used to pay extra on his student loans, but those are deductible and low interest, and if he passes away, they die with him, so why pay extra ? They're amortized for 30 years ( except for one, which is for ten years ), and he's 58, so it's highly unlikely that it will ever be fully paid off. The house is a pain in the butt, and we are upside down on it, but we're paying it down as fast as we can to get rid of the mortgage.
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zibazinski
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Post by zibazinski on Feb 2, 2011 20:16:35 GMT -5
Isn't there something that says if you make ONE extra payment per year toward your principal that a 30 year note becomes a 20 year one?
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Nazgul Girl
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Post by Nazgul Girl on Feb 2, 2011 20:52:46 GMT -5
I'm sure that there is, Zib, but since I'm already 58 and don't feel like paying the note for the next 20 years, we're making more than one extra payment per month. If the original poster wants to their PMI payment, then it behooves them to try to pay down their mortgage as fast as possible.
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hcj
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Post by hcj on Feb 3, 2011 17:47:57 GMT -5
OMG, that payment is awful for that loan amount. If Phil is correct about that being your taxes as well, can you get the house reassessed at it's lower value? They have been doing it voluntarily out here in CA for the past two years, but I still contested with some comps and got it even lower. How about your homeowner's insurance? Can you shop around and see if you might be able to get that lower? Our loan was $389K and it's $1914/mo and $366/mo for taxes and insurance.
If you can pay extra towards the principle that will be your best bet if you are not willing to do a short sale. If you can lower the tax and insurance and apply that towards principle, your loan balance will come down faster and perhaps up the road be able to refi to a better rate? I'm not sure if there is an expiration for HARP? Are prices starting to come back a bit or still falling?
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Deleted
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Post by Deleted on Feb 3, 2011 18:54:06 GMT -5
Not sure what the problem is other than owing more than the house is worth. Your payments are what you signed up for when you bought the house. Unless you have had a change in income, you should still be able to afford the payments.
If you are upset that the house is underwater, I don't get this thinking. People do this all the time with cars and don't blink, but they think houses HAVE to appreciate. It's a unique market. Sounds like you'll have a prepayment penalty if you try to refinance so that's hardly an option. Just stay in the house and wait for the price to rise. It could, you know. Good luck!
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hcj
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Post by hcj on Feb 4, 2011 4:09:44 GMT -5
Not sure what the problem is other than owing more than the house is worth. Your payments are what you signed up for when you bought the house. Unless you have had a change in income, you should still be able to afford the payments. If you are upset that the house is underwater, I don't get this thinking. People do this all the time with cars and don't blink, but they think houses HAVE to appreciate. It's a unique market. Sounds like you'll have a prepayment penalty if you try to refinance so that's hardly an option. Just stay in the house and wait for the price to rise. It could, you know. Good luck! The problem is that her and hubby are seriously looking at their finances and looking at how they can improve them. Mortgage interest rates have dropped significantly since they took out their loan and if they could refinance at today's rates, it would make a huge impact to their monthly numbers. Problem is that they can't refinance because they are so underwater on the house. For their own financial good, they should either do a short sale or a strategic default, but they are committed to following through on their obligation. Because they can pay this mortgage, they can't get a loan mod and because they are so underwater, they can't refinance. I'd be pretty frustrated and pissed off if I were them too. Everyone cut it with the lectures. These people are being responsible and a number of people who weren't are getting help. If they could refi, it would make a huge difference in their monthly nut to do all the things preached here. On that loan amount, reducing the rate 2% would be huge for them, more than cutting cable, not eating out and living on crock pot loss leader ingredients combined. Frankly, the majority of the responses here were pathetic. Half of you that gave your lecture didn't even read the thread. Propose solutions and options rather than toot your own horn about how financially responsible you are because your mortgage is so little. If they can get to 125% LTV, they can refi under HARP. Does anyone know when HARP expires? Is it possible for the OP to throw enough extra at the principal and maybe have the value increase enough to where they could refi under HARP in a year ? Who knows where interest rates will be in a year, but the Fed seems pretty committed to buying bonds to keep rates low until housing recovers.
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973beachbum
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Post by 973beachbum on Feb 4, 2011 10:47:17 GMT -5
Here it is HCJ. With the amount they are underwater I don't know if they could pay enough to make their home mortgage fit but it is worth a look.
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zibazinski
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Post by zibazinski on Feb 4, 2011 11:26:44 GMT -5
You are 58 and bought a huge house with a huge mortgage?
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