short sell and rent to get out of other debt or hold on and wait it out? - Page 7 - Mothering Forums

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Old 01-19-2009, 06:51 PM
 
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What are you talking about? I'll get behind the idea that someone who works 40 hours a week at a decent job should be able to afford a decent place to live. But the entitlement of the thought that everyone should be able to afford to BUY a home is astounding to me. Buying a house is not a right. Buying a car is not a right. Buying stocks is not a right. Buying a cell phone or an ipod is not a right. Having cable TV and internet access at home are not rights. These are ALL items to save up for. Society does not owe people these things.
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Old 01-19-2009, 09:56 PM
 
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If you put $150/month into a CD, you'd have over $20,000 in ten years. Which, at $7/hour is roughly an extra 5 hours work/week.

ETA: I see velo has already posted similar numbers
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Old 01-19-2009, 10:05 PM
 
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I am the one who doesn't get it: My friend bought a reasonable house in a recently built neighborhood for 130,000. Now those houses are selling for 100,000 at best and the neighborhood is full of forclosures. How is this her fault at all??? Should she have to continue to live in a crime ridden neighborhood or short sell, lose her credit and rent for 7 years because the builders and lenders did a wrong thing?

.
And if she'd put 20% down, she wouldn't be upside down on her mortgage....or minimally so. Not tens of thousand of dollars upside down.

Both sides are culpable. The banks who made the loans, and the people who accepted them.
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Old 01-19-2009, 10:10 PM
 
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What are you talking about? I'll get behind the idea that someone who works 40 hours a week at a decent job should be able to afford a decent place to live. But the entitlement of the thought that everyone should be able to afford to BUY a home is astounding to me. Buying a house is not a right. Buying a car is not a right. Buying stocks is not a right. Buying a cell phone or an ipod is not a right. Having cable TV and internet access at home are not rights. These are ALL items to save up for. Society does not owe people these things.

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Old 01-19-2009, 10:22 PM
 
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I am the one who doesn't get it: My friend bought a reasonable house in a recently built neighborhood for 130,000. Now those houses are selling for 100,000 at best and the neighborhood is full of forclosures. How is this her fault at all??? Should she have to continue to live in a crime ridden neighborhood or short sell, lose her credit and rent for 7 years because the builders and lenders did a wrong thing?
If she had invested in the stock market, I'm sure she'd live with the loses from a plunging market. I'm sure she'd be more than happy to go whistling to the bank if the market went up.

A house is no different. It's an investment and a risk. People were more than happy to watch their home values soar, but now they are moaning and groaning because they fell.

You take the risk, you take the fall.
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Old 01-20-2009, 01:17 AM
 
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If she had invested in the stock market, I'm sure she'd live with the loses from a plunging market. I'm sure she'd be more than happy to go whistling to the bank if the market went up.

A house is no different. It's an investment and a risk. People were more than happy to watch their home values soar, but now they are moaning and groaning because they fell.

You take the risk, you take the fall.
Yes, absolutely.

The other thing is that by propping up Dinahx's friend's house, to use her example, at $130,000, by underwriting her loan, Dinahx is essentially saying that she doesn't really care about the people who want to get into the market and would prefer to keep them out. Keeping artificially high prices up by subsidizing loans (e.g., resetting ARMs, etc.) keeps people out of the market who might otherwise buy. First-time buyers who could afford a house that is at market value are kept out by artificially inflated values.

I'm not even going to get into the idea that everybody is entitled to a risk-free investment in their house and it's the taxpayer's job to provide that.
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Old 01-20-2009, 01:42 PM
 
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One idea is to put a small amount of money in your saving account every month. You can have it debit automatically from checking.
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Old 01-21-2009, 02:48 PM
 
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And if she'd put 20% down, she wouldn't be upside down on her mortgage....or minimally so. Not tens of thousand of dollars upside down..

I've been lurking on this thread as I am trying to figure out what to do with our current house situation. We've been wanting to move for the past two years and the market here in FL has only been getting worse. We put down 20% when we bought our house. We owe a bit under 250K on our house. I knew the prices were bad and accepted long ago that our downpayment was gone, the equity was gone. I just found out a house similar to ours was sold in a foreclosure for $98K. 98K!! That house was on the market for over a year. I know someone put in a short sale offer at $170K and the bank refused. There was another offer for $150K and the bank took 4 months to get back to the buyer and the buyer was gone by then. So it ended up being $98K in foreclosure. We all suffer... the bank dragged its feet, so now the values are pulled down even further. Same thing happening with my dad, who has been trying to sell his second house for a year. Offers went from $300K down the latest of $150K because the bank takes 3-4 months to respond and he loses his buyers - meanwhile the market gets worse and prices fall even more. Banks aren't lending much, so there are even less buyers out there. SO now he's on the hook for that money? Sure he shouldn't have bought it in the first place, but because of the bank's inaction, he's been going through hell for the past year and will end up with ruined credit and might be on the hook for the repaying the whole loan. This situation is just so complex, I wish some people would show a bit more compassion to others.
sorry for this ramble, it's just such a loaded question and such an emotional issues. OP, I honestly don't know what to do myself at this point...
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Old 01-21-2009, 06:05 PM
 
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I've been lurking on this thread as I am trying to figure out what to do with our current house situation. We've been wanting to move for the past two years and the market here in FL has only been getting worse. We put down 20% when we bought our house. We owe a bit under 250K on our house. I knew the prices were bad and accepted long ago that our downpayment was gone, the equity was gone. I just found out a house similar to ours was sold in a foreclosure for $98K. 98K!! That house was on the market for over a year. I know someone put in a short sale offer at $170K and the bank refused. There was another offer for $150K and the bank took 4 months to get back to the buyer and the buyer was gone by then. So it ended up being $98K in foreclosure. We all suffer... the bank dragged its feet, so now the values are pulled down even further. Same thing happening with my dad, who has been trying to sell his second house for a year. Offers went from $300K down the latest of $150K because the bank takes 3-4 months to respond and he loses his buyers - meanwhile the market gets worse and prices fall even more. Banks aren't lending much, so there are even less buyers out there. SO now he's on the hook for that money? Sure he shouldn't have bought it in the first place, but because of the bank's inaction, he's been going through hell for the past year and will end up with ruined credit and might be on the hook for the repaying the whole loan. This situation is just so complex, I wish some people would show a bit more compassion to others.
sorry for this ramble, it's just such a loaded question and such an emotional issues. OP, I honestly don't know what to do myself at this point...
I'm trying to have compassion for others, and I know that it's a hard situation. As I said upthread, we put a good downpayment (almost 20%, not quite) on our current home, and we're quite possibly underwater right now. So believe me, I understand how much it sucks to see all of the equity in your home just disappear. I'll gladly admit that I made a mistake in buying this house, from a strictly financial point of view. Like the OP, I'd really like to move somewhere else. But ya know what? I can't afford it. I wish I could just walk away from my house and buy a cheaper house near my family. But I'm a big girl. I chose to buy this house, I chose to make myself responsible for taking out a mortgage and repaying that mortgage. So I'll stay here and ride this out. I don't hold our investment broker responsible for the fact that our 401K has plummeted in value, and I don't hold our mortgage broker responsible for the fact that our home has plummeted in value either. I took the risk to invest in a 401K and the risk to invest in a home.

I just don't understand why people are willing to accept profits when the markets are up, but are unwilling to accept losses when the market goes down. Risk is inherent in investing.

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Old 01-21-2009, 06:12 PM
 
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So what would you do if there was a toxic waste site two doors down? And everyone in your neighborhood was getting cancer with a settlement no where in sight? Would you really sacrifice your families health to honor some words on some paper?

My point is, everyone has a point at which the benefits of honoring your contract are outweighed by the risks of staying where you are. Financial or otherwise. The banks are not willing to take the risks of investing: The bailout is going to pay them as if the market never tanked right? It is going to pay them the balance of their lost investment even though they also took a risk that the value of the property that secured their loan would not hold.
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Old 01-21-2009, 06:23 PM - Thread Starter
 
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http://cbs5.com/business/home.price.drop.2.914041.html

just a local news article about how houses in my area have tanked 50% and how foreclosures are effecting that number.


I dunno it sort of like those people at a traffic jam that get around everyone by "cutting in line" they make everyone else wait longer and put everyone in danger but they do end up getting where they need to go faster than me sitting quietly in the back of the jam getting screwed over. I dont want to be that person anymore, I want a bail out too, I want to jump on that wagon,not just caue im impatient but because now I have a family to think about and I need to do what's best for them. Not only am i wasting my life waiting in a traffic jam instead of cutting people off, my daughter is too, ok maybe it's a lame example/analogy whatever

but i think even people that typically would never even think of foreclosure or short sale are getting tired of being screwed over while banks and other get a break at our expense with our money. I see my neighbors getting out of overpriced condos and I want someone to come and just take all my debt away and I want to move.

For now we are waiting it out, but it IS really tough to cut everything and anything we can and do it all to pay a mortgage on a house that is now worth half that mortgage actually way less with interest and to top it off not even see the principle go donw for years to come, it has nothing to do with adulthood and responsibility at this point.
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Old 01-21-2009, 06:31 PM
 
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your analogy makes a long of sense to me

that's exactly how we feel, after putting down 20% and still finding ourselves owing twice what our house is now worth to the bank.

we've been patient for a while, wanting to move because we live so far from our jobs - takes me 1.5hrs each way! to go to work when it could be minutes. but things seem to be getting worse and worse and no end in sight.
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Old 01-21-2009, 07:05 PM
 
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So what would you do if there was a toxic waste site two doors down? And everyone in your neighborhood was getting cancer with a settlement no where in sight? Would you really sacrifice your families health to honor some words on some paper?

My point is, everyone has a point at which the benefits of honoring your contract are outweighed by the risks of staying where you are. Financial or otherwise. The banks are not willing to take the risks of investing: The bailout is going to pay them as if the market never tanked right? It is going to pay them the balance of their lost investment even though they also took a risk that the value of the property that secured their loan would not hold.
You seem to jump to the most extreme scenario to prove your point. I think everyone has agreed that in case of job/income loss, etc. where you CANNOT make mortgage payments you just have to do what you have to do to survive. We are making the distinction between not being able to make payments and choosing not to for convenience or to satisfy another want that you have. How is this AT ALL similar to living next to a toxic waste site?

I'm not trying to get you to agree with me because I don't think that will happen and that's fine. But it sounds like you are trying really hard to justify your point of view, perhaps you don't believe it yourself?
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Old 01-21-2009, 07:19 PM
 
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That's really not it at all. I used an extreme scenario to illustrate that you can't always cling to the 'I'm going to honor my word no matter WHAT I mean I made a promise to the BANK' ethos that y'all seem to think that you can live and die by and if not you are a total scumbag, kwim?

And FTR the scenario is not that extreme, people lose their home values to environmental incident all day long. My church is right next to a HUGE substation that just kept getting bigger over the years, slowly obliterating the property value. SOL was what they were. Also google Anniston Alabama. Totally obliterated by PCBs. Or Woburn MA, lots of children in my brother's nursery school class got leukemia when we lived there. They even made a movie about it with John Travolta. Also, Mountain Top Removal Mining ruins people's property values down mountain.

As an aspiring enviornmental chemist, perhaps I am more aware of property values and the environment and their intersection than others, but that doesn't mean my example was THAT extreme. Can and does happen in the USA!
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Old 01-21-2009, 07:23 PM
 
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Again, I am not in the short sale position, and even if I was, Thankfully, by no luck or skill of my own (I really believe we were led here) I live in a house I would be fine living in if it was worth 1/2 what I paid for it or less.

It is more that I am arguing for COMPASSION and EMPATHY for those who are not so fortunate and do need to get out of their situations. At least as much as we have for the Banks, now. And I believe we should have more vitriol for the banks, builders and brokers, those who have already profited and now are watching other people suffer the consequences, because at the end of the day, it is human beings that are making these decisions, even if they hide behind the legal protection of a for profit corporation.
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Old 01-21-2009, 07:39 PM
 
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I just heard this story on NPR's Marketplace yesterday. This is yet another example of how this issue is very complex and not simply an issue of people needing to be responsible adults that live up to their mortgage commitments no matter what. If it really is just an issue of irresponsibility on the part of homeowners, why are African American families foreclosing at higher rates than white families? PREDATORY LENDING!!!

http://marketplace.publicradio.org/d...best_of_times/
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Old 01-21-2009, 07:40 PM
 
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So what would you do if there was a toxic waste site two doors down? And everyone in your neighborhood was getting cancer with a settlement no where in sight? Would you really sacrifice your families health to honor some words on some paper?
Nope, I wouldn't. But I don't think a single person on this thread is in a place where they are sacrificing their family's health to live up to their end of the contract.

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My point is, everyone has a point at which the benefits of honoring your contract are outweighed by the risks of staying where you are.
Of course, and I don't think anyone has stated otherwise on this thread. There's a big difference between walking away from a house that is threating your health and walking away from a house because you decided that you just don't want to live there anymore.

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Financial or otherwise. The banks are not willing to take the risks of investing: The bailout is going to pay them as if the market never tanked right? It is going to pay them the balance of their lost investment even though they also took a risk that the value of the property that secured their loan would not hold.
This is not true. The bailout is not going to pay banks as if the market never tanked. Financial companies are being protected from failing completely, not being completely protected from losses. Most large banks are taking big steps to minimize their losses- many are laying off a large percentage of their employees in an attempt to keep the company solvent. While we do hear a lot about CEOs and other high level executives keeping privledges that they shouldn't, news outlets are also reporting that megabanks are making massive spending cuts. Banks are hurting also.

I have a good friend who is a low-level executive at a large bank that has been in the news. He's been involved in deciding which groups of employees to lay off, which business projects to abandon because they are unprofitable, and how to cut expenses in currently projects that are currently profitable. Believe me, things are not all sunshine and roses at banks these days. They are feeling the hurt too- especially the employees who have lost their jobs.

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Old 01-21-2009, 07:48 PM
 
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It is more that I am arguing for COMPASSION and EMPATHY for those who are not so fortunate and do need to get out of their situations. At least as much as we have for the Banks, now. And I believe we should have more vitriol for the banks, builders and brokers, those who have already profited and now are watching other people suffer the consequences, because at the end of the day, it is human beings that are making these decisions, even if they hide behind the legal protection of a for profit corporation.
I do have compassion and empathy for people who really do NEED to get out of their situations. I truly do. I even have compassion for my family members who CHOSE to walk away from their house because they were upside down and just didn't want to live there anymore. It was a hard decision for them, not something they took lightly. I still like them as people, but I don't think that what they did was ethical, and it was not a choice I would've made. Period. I can have compassion for people who are stuck in a hard place while still believing that they are not doing the right thing.

As for the traffic analogy, I LOVE it when a car gets into the left lane and chooses to drive slowly, at the pace of the cars in the right lane, to prevent other people from cutting in line. I've done it myself, usually with a big thumbs up from the person I pace off of in the right lane. It makes the people who are in a hurry mad, but it evens the playing field.

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Old 01-21-2009, 09:22 PM
 
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I just heard this story on NPR's Marketplace yesterday. This is yet another example of how this issue is very complex and not simply an issue of people needing to be responsible adults that live up to their mortgage commitments no matter what. If it really is just an issue of irresponsibility on the part of homeowners, why are African American families foreclosing at higher rates than white families? PREDATORY LENDING!!!

http://marketplace.publicradio.org/d...best_of_times/
I don't think you can peg that all on predatory lending and frankly am a bit irritated/find it a bit racist at the implication that african americans are too stupid to find a good loan. There are differences in resources that among middle class whites and middle class African Americans (I'm pretty sure that the odds that white Americans have more affluent relatives that can help them out are higher). Maybe more African Americans live in areas that have been hard hit in this recession?

I think about the old correlation is not causation expression fits here very well.
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Old 01-21-2009, 09:53 PM
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It is more that I am arguing for COMPASSION and EMPATHY for those who are not so fortunate and do need to get out of their situations. At least as much as we have for the Banks, now. And I believe we should have more vitriol for the banks, builders and brokers, those who have already profited and now are watching other people suffer the consequences, because at the end of the day, it is human beings that are making these decisions, even if they hide behind the legal protection of a for profit corporation.
Oh that's right, only you have COMPASSION and EMPATHY.
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Old 01-21-2009, 09:55 PM
 
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I guess so.
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Old 01-22-2009, 01:24 AM
 
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I don't think you can peg that all on predatory lending and frankly am a bit irritated/find it a bit racist at the implication that african americans are too stupid to find a good loan. There are differences in resources that among middle class whites and middle class African Americans (I'm pretty sure that the odds that white Americans have more affluent relatives that can help them out are higher). Maybe more African Americans live in areas that have been hard hit in this recession?

I think about the old correlation is not causation expression fits here very well.
Ah, I didn't want to jump back into the fray here because I have really concluded that I'd rather reach out to those who are in this situation and know how excruciating it is than beat me head against the wall trying to convince people of my feelings and point of view, yet, mnice, I couldn't let this go uncorrected:

Whoa, no, you are TOTALLY MISSING THE POINT HERE. The point is that people who are victims of predatory lending are NOT stupid (greedy, immature or any of the other words that have been tossed around here)! If you'd listened to/read the piece, you'd have learned that African Americans were disproportionately targeted for sub-prime loans--even upper-middle class African American families that could have qualified for a traditional loan NOT because they were themselves stupid but because they were taken advantage of by predatory and apparently racist lenders. The point that I think many of us are trying to make here that I think some of you are missing is that the mistake many people made was NOT being greedy or cavalier but was in trusting the "experts" who sold them their loans.

"2009 may also go down in history as the year that more African Americans fell out of the middle class than any other time in our nation's past. Best estimates are that African American homeowners are 2-1/2 times more likely to be in foreclosure than their white counterparts. At that rate, more than a million African American homeowners will lose their home in the next four years. That's one in every five."

These people were indeed NOT stupid but were instead hopeful that they could join the middle class in living the American Dream like many of the pps here.

If a woman goes out walking on a dark street at night and gets assaulted, you don't blame the woman. The same is true here. Maybe some of us are guilty of naivete. But that doesn't excuse a system that deliberately exploited our trust and our dreams for a bright future.

Well, the inauguration yesterday left me, for one, feeling full of hope and motivation and a feeling of brotherhood so once again...my heart goes out to everyone who is suffering during these scary times but I believe that things will change! Good luck to you and your families and your neighbors.

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Old 01-22-2009, 04:33 AM
 
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I agree, the pitch goes like this:

Hmmm, with your credit, work history, general scumbagginess, the ONLY loan you will qualify for anywhere is this (predatory) one. Also, you will be able to afford the MOST house this way, and since houses appreciate x percent per year around here, more house means more equity faster. Which means moving up to a house you really like (since the ones a price range above are always WAY better). My mortgage brokers literally acted SHOCKED and appalled when I decided to demand a fix rate and get three estimates. Like WHY would you do that?

Just saying, it was dang tricky!
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Old 01-22-2009, 05:31 AM
 
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I honestly don't see the whole "blame the banks" thing when you buy a house you no longer want/ can't afford/ "lost" money on. To me it seems like racking up credit card debt and then blaming the cc company for charging you a lot of interest. You (general you, not aimed at a specific poster) agreed to the terms by taking the credit... whether in the form of a mortgage or by going out and charging things on a credit card. Now you (again, general you) have to live up to the end of your bargain. ETA: And if you don't understand something DON'T SIGN AND TAKE THE MONEY! Ignorance is NOT an excuse!

And yes, I do understand that circumstances change, and I totally understand when someone has to foreclose because they have no other options. But to walk away just because you have a plan or a dream for your life and the house is tying you down? That's just irresponsible and selfish, imo.

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Old 01-22-2009, 09:53 AM
 
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Originally Posted by grniys View Post
. But to walk away just because you have a plan or a dream for your life and the house is tying you down? That's just irresponsible and selfish, imo.
Yep. This is one of the reasons renters should not be sucked into all the hype surrounding buying. Renting is not throwing money away if your overall financial, job, or lifestyle situation does not support buying. It is the smart move to keep renting.
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Old 01-22-2009, 12:26 PM
 
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I had made a post, but apparently it was eaten, re: the long term vs short term investment view of buying a house. We didn't buy a house until we were sure we were going to be in it for at least 10 years (based on our family planning ideas looking at school districts, and job/careers getting stabilized looking at commute times), because we didn't trust the market to be stable/increase over the short term and wanted less of a chance of getting screwed. We rented for the first 8 years we were married even though we could have probably afforded a small house as DINKs in a low COL area. I guess I just don't see buying a home as 'the next step', but as something that you do when you are ready to set down roots and be in a place for the next 10+ years. Buying just to buy a house to have the "American Dream" and wagering that the value will go up in a few years and you'll make out when you want to move/upgrade is a really risky way to view homeownership, IMO. And I know of several people IRL who have done that...bought a house they knew they weren't going to stay in for more than a few years, and then sold/upgraded and now are really, really stretched to the limit. It almost seems as if this is another symptom of the increasing disposable, impermanent nature of the society...but that may be the topic of another discussion.

**requisite disclaimer that the above does not apply to situations where sudden unexpected circumstances are thrust upon a family and you can no longer afford the payments, need to move for emergent reasons, or the neighborhood becomes dangerous, etc. This is about people who buy a house expecting to sell/move/upgrade after building equity in 5 years or less, trusting that teh market will increase - that just seems very short sighted and inherently risky IMO.

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Old 01-22-2009, 12:26 PM
 
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Originally Posted by Sonnenwende View Post
Yep. This is one of the reasons renters should not be sucked into all the hype surrounding buying. Renting is not throwing money away if your overall financial, job, or lifestyle situation does not support buying. It is the smart move to keep renting.
Or, I could have skipped reposting and just said, : to this.

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Old 01-22-2009, 05:33 PM
 
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Originally Posted by grniys View Post
I honestly don't see the whole "blame the banks" thing when you buy a house you no longer want/ can't afford/ "lost" money on. To me it seems like racking up credit card debt and then blaming the cc company for charging you a lot of interest. You (general you, not aimed at a specific poster) agreed to the terms by taking the credit... whether in the form of a mortgage or by going out and charging things on a credit card. Now you (again, general you) have to live up to the end of your bargain. ETA: And if you don't understand something DON'T SIGN AND TAKE THE MONEY! Ignorance is NOT an excuse!

And yes, I do understand that circumstances change, and I totally understand when someone has to foreclose because they have no other options. But to walk away just because you have a plan or a dream for your life and the house is tying you down? That's just irresponsible and selfish, imo.
No, no, this foreclosure mess is not about a pandemic of people who decided their houses were "tying them down!" You can give examples of individual cases where this was true but what I urge is to look at the big picture of this mess and talking about how and why it happened. Individual responsibility must play a part, but I think that anyone who does not see how much bigger and more complex this crisis is than just people who decided they didn't feel like living in their houses anymore needs to learn more about it. If we don't acknowledge that, we are simply trading anecdotes, preaching to the choir of people who are not themselves facing foreclosure and making sophomoric arguments that don't illuminate the topic and that get us nowhere.

A pp linked to a This American Life special on the housing crisis that I think would be a great primer for someone looking for details (and varying viewpoints) on how this whole thing happened.

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Old 01-22-2009, 05:52 PM
 
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Originally Posted by DianeAK View Post
No, no, this foreclosure mess is not about a pandemic of people who decided their houses were "tying them down!" You can give examples of individual cases where this was true but what I urge is to look at the big picture of this mess and talking about how and why it happened. Individual responsibility must play a part, but I think that anyone who does not see how much bigger and more complex this crisis is than just people who decided they didn't feel like living in their houses anymore needs to learn more about it. If we don't acknowledge that, we are simply trading anecdotes, preaching to the choir of people who are not themselves facing foreclosure and making sophomoric arguments that don't illuminate the topic and that get us nowhere.

A pp linked to a This American Life special on the housing crisis that I think would be a great primer for someone looking for details (and varying viewpoints) on how this whole thing happened.
Where did I ever say the foreclosure mess was caused only by the ones walking away from their homes by choice? I'm just saying it's not right for them to do so now. I KNOW that this is a complex situation. Really, I'm not ignorant. But people deciding they don't want to live in their homes because they've lost value or they feel "cheated" by the banks still isn't right.

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Old 01-22-2009, 09:22 PM
 
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