Are we ever going to be able to sell?

[MacKinnon]

I know, in theory, we will eventually owe less on our house than it is worth. But it will literally, be like 15 or 20 years. I can not image staying here that long. I feel very selfish to complain about four walls, a roof, security, good schools, etc. I know that it could be worse, and we will be fine. But... I'm both going to go ahead and complain, and ask a serious question.

We live in Michigan and bought this house in 2004, near the peak of market, and owe more than it is worth now, by about 5% on our mortgage, and 15% on a home eq. loan that was used to put in a furnace and pay back my mom (we bought from her and she both gave us a good deal and gifted us her equity, we paid some of the equity back). Anyway, it's a 3 bed. 1 bath, no basement, no garage. We intended this to be a starter home, and we were going to move this summer before DD started Kindergarten. We are pretty squished here now, and we want to add to our family. I'm terrified, when I really think about it, that we will truly be here for 20 years. I am loathe to put money into the house to add on, or remodel, because it feels like a sink hole. We could afford a larger mortgage, and really, with prices like they are now, we could get something a fair amount bigger for the same price. I really hate our house. I look around us, and all of our friends, and most of our neighbors are in the same boat. With Michigan going to hell in a handbasket, it's not getting any better soon. Do you think there will be something done to allow for short sell, with less or no penalty, when you are current on your loan? I know some of you will think that it shouldn't be done, as a debt is something you owe. I never thought I would be looking for an out, but I don't see this collapse as the same kind of over extending. We DID buy within our means, and we CAN afford something bigger, but we can't get out. IMO, it's part of what has the real estate market locked down, there is no movement. Anyway, thoughts?

[SleeplessMommy]

There are real estate swaps out there - basically you agree to buy house X, and the seller of X buys your house. Since you are buying "up", it may be easy to find a MI homeowner who wants a smaller, less expensive house. With the "swap" it is really two separate sales, both closing on the same day.

In your part of MI, is anything selling? If so you could plan on saving until you are able to pay back the 20% extra on the house, and list it for sale. I think some sort of swap might still be the way to go, since it would be really really hard to do showings with 2 kids in a tiny house.

[BetsyS]

We;re in the same pickle. The difference is that we are in a school system that is on the decline, and our elementary school seems to get worse and worse every year. We are in a pretty high density area, and just one street over in 3 directions are all zoned for different (better performing) schools. I certainly wouldn't buy our house when I could go one street over and get a better school.

When we allow ourselves to think about it, it's very depressing. I didn't intend to live here for 20 years, you know?

For right now, we've just stopped thinking about it. Not the best plan, but best for our sanity. We've sort of decided to give it a year, see what housing values start doing, and then go from there. I hope that we are at the bottom now. If so, maybe things will start to get better.

It's just really hard not knowing if we'll be able to get out with the minimum of damage (say a $20,000 loss) in 3 years or if it's going to take 23. Makes it hard to make a good decision, imo.

[SuzyLee]

We are in a similar situation. Probably not quite as bad, but yah, we are stuck unless we get a job relocation package that will help with it.

We have come to terms with it at this point. We *could* move, if we were willing to come up with the $$$ it would take to get out from under our house. Since that is a huge amount of money, we choose not to make the sacrifices needed to save that much money.

We have definitely learned a lesson though- I doubt we would veer buy another house without 25% or more down.

[Pernillep]

Originally Posted by BetsyS

We;re in the same pickle.

When we allow ourselves to think about it, it's very depressing. I didn't intend to live here for 20 years, you know?

For right now, we've just stopped thinking about it. Not the best plan, but best for our sanity. We've sort of decided to give it a year, see what housing values start doing, and then go from there. I hope that we are at the bottom now. If so, maybe things will start to get better.

It's just really hard not knowing if we'll be able to get out with the minimum of damage (say a $20,000 loss) in 3 years or if it's going to take 23. Makes it hard to make a good decision, imo.

This is where we are. I would never send my kids to school where we live. We are right now about $20k underwater after having lived here for 5 years.
We had planned on moving this year but now simply can't. The neighborhood is declining and crime is rising. Several houses on my block is forclosd on and falling into disarray. Honestly, I wouldnt buy here today if someone paid me.
THe unfortunetely thing is I no longer feel safe living here. To much violent crime, gang activity and drugs. We will most likely try to put the house up after the baby is born at what we owe on the mortgage and see if we get any takers. If not I don't know what we are going to do. We are willing to take a loss but really cant handle more than $20k and even that we would need a loan to cover.

[Delicateflower]

Originally Posted by ilovemyavery

I know, in theory, we will eventually owe less on our house than it is worth. But it will literally, be like 15 or 20 years.

We could afford a larger mortgage, and really, with prices like they are now, we could get something a fair amount bigger for the same price.

If you have extra money why can't you pay extra until you're in the black? Or move out, rent somewhere you like and rent this house out to pay the mortgage?

[SeekingJoy]

If you can afford a larger mortgage, it sounds like your best choice is to pay down the mortgage as fast as you can until you are no longer underwater. Then it won't take 15-20 years, but could take as few as 2-3 until you can sell. Looking at an amortization table can show you just how much of your current payments go to principal vs. interest. It is crazy how many payments an extra $200-300 can knock off when paid early in a mortgage.

[Delicateflower]

Originally Posted by SeekingJoy

If you can afford a larger mortgage, it sounds like your best choice is to pay down the mortgage as fast as you can until you are no longer underwater. Then it won't take 15-20 years, but could take as few as 2-3 until you can sell. Looking at an amortization table can show you just how much of your current payments go to principal vs. interest. It is crazy how many payments an extra $200-300 can knock off when paid early in a mortgage.

When I looked at PMI, we could pay down to 20% equity in just over a year, when it would have taken five years on the normal payments.

[Thystle]

Originally Posted by SleeplessMommy

There are real estate swaps out there - basically you agree to buy house X, and the seller of X buys your house. Since you are buying "up", it may be easy to find a MI homeowner who wants a smaller, less expensive house. With the "swap" it is really two separate sales, both closing on the same day.

In your part of MI, is anything selling? If so you could plan on saving until you are able to pay back the 20% extra on the house, and list it for sale. I think some sort of swap might still be the way to go, since it would be really really hard to do showings with 2 kids in a tiny house.

Man if that could work then two families might be helped!!!!

[shelleyd]

I want to address your questions about a short sale. We were going to try for a short sale on our house. You definitely have to show a financial need to qualify for a short sale. They won't agree to it just because you want to move but can afford the mortgage.

Good luck. I'm sorry your situation sucks. I just moved from MI and I know how bad the real estate market is.