An epiphany

[BetsyS]

I've posted about it before, but we are in one of those upside down houses, and we've been lamenting about it for almost 2 years. Not sure of what direction to take, not sure what to do.

We borrowed 100% at the peak of the market, in an adjustable rate mortgage. We've seen housing prices fall to 2/3 of what they once were (when we bought). And, we've been scared and really unsure of what to do. Our mortgage resets next fall to a new interest rate.

But...I've been running some numbers. If we up our payment by $375/month, we should be able to pay off the second (20%) mortgage in only 6 years. Now, I am not sure where the extra $350 will come from, but when you think about it yearly, it's only $4500 a year. If I'm not able to find that much money in our budget, I'll just have to go to work to make it. A bad consequence of a bad decision. Hopefully, we'd be able to do that with a minimum of daycare.

In 6 years, hopefully, the market will have returned a little, and we will have paid off enough that we'll be able to get out of this house and not have to bring cash to closing.

For the first time in a long time, I can feel a little hope.

[mightymoo]

Also I know this doesn't seem like a good thing, but one of the consequences of all this government stimulus will likely be inflation. Whether its huge or not, its probably a good bet it will be higher than normal/average. While on a cost of living standpoint inflation seems bad, hopefully your income and home value will somewhat keep pace with inflation, interest rates will go up, but if you have a fixed rate mortgage, it will remain the same and your mortgage debt will get relatively smaller in comparison to your income. At least, that's what I'm hoping for!