What about foreclosure am I missing? (long) - Page 3 - Mothering Forums
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#61 of 153 Old 03-22-2009, 11:11 AM
 
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Even if they are forced to rent for the next ten years, rents are less than half for a comp. home, then they are free to save half of the $$ for the next ten years.. and come up with a 250K dollar down payment.
For both the OP and Boobybunny, the thing about rent is that you have no control over the rent going up. What houses rent for now may not be what they rent for once the market rebounds. But your mortgage amount will always be the same.

It seems to me like you're doing the worst - buying at the peak and "selling" at the trough. Real estate prices do go up in the long run. Is there any chance of hanging onto the house for the intended 5 years and then selling? The market should rebound by then. And it would preserve some options for you.

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#62 of 153 Old 03-22-2009, 12:53 PM
 
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I think http://www.npr.org/templates/story/s...ryId=101611260is the NPR story referenced earlier in this thread. I have all the respect in the world for Elizabeth Warren, and highly recommend listening to this show.

Yup, I am pretty sure that was it! It was really interesting.

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#63 of 153 Old 03-22-2009, 01:36 PM
 
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It'd be financially best for me to shoplift, should I do that?
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#64 of 153 Old 03-22-2009, 03:39 PM
 
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Skipping all the things I want to comment on and writing to the OP

OP, Is there any chance that prices are 'deflated' in your area due to no one wanting to buy? All the things the gov is trying to do actually create more uncertainty, and no one wants to make decisions until they figure out what is really going on. My thoughts are that prices may very well turn around in the next 5 years, and then where will you be? No one can really predict the future, and I'm not trying to, but I do think there will be more consequences for those choosing forclosure NOW vs. 3 years ago. FOr one, rent prices are subject to change. With more people forclosing and leaving homes to RENT, that means more potential renters. THink supply and demand. Suddenly a house for rent get 10 prospects instead of 3. So the owner does credit checks on them (this is standard even in mylittle town), and takes the nicest of the 10. The landlord can also raise rent. I don't think current rent prices are accurate to base your decision on. You will also probably have to get another car in the next 7 years, so you will get higher interest there as well. I don't know what is the best choice for you, but as far worrying about saving for retirement/college, I don't think you really need to focus or make decisions about taht right now, in the middle of a financial crisis. The next 5 years are IMO the years we just need to get thru, then things will get better again. Prices will adjust out, jobs will come back and raises will come. We just have to be patient and dilligent. Keep looking for a job and if it comes down to it, forclosure IS a last resort that you still have available. I'd also call whomever is in charge of that assessment and tell them you can't afford it. Urge your neighbors to do the same and hopefully they can get that off the agenda for now. I think ti's worth a shot considering how bad the economy is. I'd bet there are lots of families like yours who really don't want that added assessment!
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#65 of 153 Old 03-23-2009, 11:19 AM
 
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Hi everyone!

I was notified that this thread was removed last night. Thanks for your patience while I checked it out this morning.

OK. A few tiny reminders and then we'll be good to go!
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#66 of 153 Old 03-23-2009, 11:40 AM
 
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I think the proper attorney to contact would be a bankruptcy attorney. We got a consultation from a friend of DH's who is one when we were first discussing the short sale of our other home (we got caught during a move during the bubble burst in S. Florida). They will be able to tell you the legal ramifications, and also let you know which of your assets can be siezed if you do a foreclosure and have to file bankruptcy (i.e. if you have cars that are paid off they may be able to take those, my MIL and SFIL are foreclosing on an investment property and they are afraid their business property will be taken). There are also two types of bankruptcy you can file, Chapter 11 and Chapter 7, they are determined by income, and they will affect if your unpaid debt will be forgiven, or if you will have to make a payment plan to pay it off. Also, please be aware that you may be liable for paying taxes on any forgiven debt as if it were income.

We just short sold a home we were upside down on and it wasn't pretty. From what I can tell we are currently 40k behind on the home that we now own. There is no way that I would go through all that again if I didn't have to, so we will ride this out and stay put hoping that one day the house will be worth what we bought it for. Good luck with whatever decision you make.
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#67 of 153 Old 03-23-2009, 01:54 PM
 
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I think I live in a similar area to the OP. I cannot imagine having bought in 2006 and trying to sell now. We moved to this area in late 2005 and we knew prices were too high, and only hoped they would correct sometime in the next 3-5 years so we could buy. Well our area is following behind the rest of the country and house prices are only just starting to fall/sales are starting to slow. We're starting to look into buying now that this is happening. So in this aspect, we're maybe a year behind "most" of the country with unemployment finally starting to rise with layoffs at some of our major employers. That said I know just what the OP means with renting being cheaper than buying, it's been that way for a long while. There is a newbuild row home complex right next to our condo complex that had units for sale last year in the $700-800k's, some were bought as investment properties and I see them listed on Craigslist for only $3k/month. I can't believe that they're covering a mortgage/expenses for that. It's really nutty. We're hoping in a year or so prices will have well and truly fallen and we can buy, only thing is that mortgage rates will be a bit higher so it is a gamble.

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#68 of 153 Old 04-15-2009, 11:19 PM
 
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I am going to say this in the nicest way that I can, because I don't want this thread to get closed down... but reading that post made me feel sick to my stomach.

Is that what everybody is going to do? Just walk away? What is going to happen to this country? My head is spinning.
What you said makes it sound like the home owners' fault. Its not. Its the banks' fault for making bad loans to people they knew would never be able to afford their mortgage. This caused prices of houses to artificially rise and created artificially high values of homes for which the value really never existed because the banks knew the buyers wouldn't repay their loans. Yet the banks still made the loans to everyone they could because it made them more money. That is what should make everyone's head spin. There is a documentary that CNBC released called "House of Cards" that explains how its the banks who were responsible for this economic crisis: http://www.cnbc.com/id/28892719/ So if anyone wants to talk about foreclosure being unethical, let's look at the root cause of it all: the greedy banks.

We made the final decision that we are walking away from our home too. We did a zero downpayment, interest only loan that demands we pay principal in a few years, for which we'd never be able to afford. Yet Indymac Bank made this loan to us for a house we could not afford. We have a So. CA 1955 home that we purchased for $565,000 in December 2006, and right now at best the value would be about $320,000. My husband just took our mortgage off auto-pay, so starting in May, we'll be living in this house for free for 6 months+, saving us the $3,200 monthly mortgage payment.

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#69 of 153 Old 04-15-2009, 11:25 PM
 
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This? Is flat-out NOT TRUE. Blaming individual homeowners for "not paying for the homes they got" is a vast oversimplification of what caused the financial crisis -- which was partially bad actions on the part of the federal reserve by keeping interest rates artificially low, but mainly the actions of banks who sold mortgages off as securities rather than keeping them on their books. Selling off mortgages meant there was no incentive on the part of banks to be careful who they were lending to because they weren't on the hook, so basic ideas of affordability were completely ignored.

It really frustrates me and makes me angry to see us blaming individuals for a crisis that was caused by corporate ignorance and greed. When corporations make decisions that are in their financial best interests, we cheer them on and their stock prices go up. Why do we guilt and punish individuals when they make the same kinds of decisions based on the same sort of facts?
Yes, thank you. Corporate Greed is to blame. Its not the individual home owners' fault. "House of Cards" explains what you said. Great documentary that everyone should watch.

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#70 of 153 Old 04-15-2009, 11:31 PM
 
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We did a zero downpayment, interest only loan that demands we pay principal in a few years, for which we'd never be able to afford. Yet Indymac Bank made this loan to us for a house we could not afford. We have a So. CA 1955 home that we purchased for $565,000 in December 2006, and right now at best the value would be about $320,000. My husband just took our mortgage off auto-pay, so starting in May, we'll be living in this house for free for 6 months+, saving us the $3,200 monthly mortgage payment.
Ok I am not trying to be rude, I am genuinely asking....

Why did you sign the papers for a loan whose terms you knew you couldn't afford?? You say "Indymac Bank made this loan to us for a house we could not afford" as if there was a gun to your head to sign this loan? Am I misunderstanding this?

We were in a 'bad loan', but for different reasons. We were told by the mortgage lender that our rate would go up OR DOWN when the 2yr ARM hit based on how timely our payments were made combined with our credit score. When we read the part about it 'potentially' increasing up to 18%....we were told again and again this was ONLY if we had any late payments, ONLY if we increased our credit risk, otherwise it would go DOWN. We didn't...never made a late payment and our credit is a TON improved, yet it was set to adjust HARD, the first jump was to 12% I think?. We were really lucky that we had been so neurotic about making the payments in the first place (that yes, were higher than most people, we took the loan at 10.25% w/10% down and pinched every penny to make it work) because we were able to refi at 6%, only a tenth over prime at the time.

I don't understand willingly taking out a loan (interest only, of all things, clearly means at SOME point you have to pay more...) that you know from the outset you can't afford.

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#71 of 153 Old 04-16-2009, 12:15 AM
 
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#72 of 153 Old 04-16-2009, 12:18 AM
 
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One concern you might keep in mind is that the mortgage company might not foreclose. That is happening in some places, as the mortgage companies conclude that foreclosure procedings plus the cost of maintaining the property and the property taxes with little hope of selling, more and more often they are choosing not to foreclose. The condo might very well remain in your name with property taxes accruing, and you can't get out of those property taxes except maybe by bankruptcy (not sure if you can get out of them even then).
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#73 of 153 Old 04-16-2009, 02:07 AM
 
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Ok I am not trying to be rude, I am genuinely asking....

Why did you sign the papers for a loan whose terms you knew you couldn't afford?? You say "Indymac Bank made this loan to us for a house we could not afford" as if there was a gun to your head to sign this loan? Am I misunderstanding this?

I don't understand willingly taking out a loan (interest only, of all things, clearly means at SOME point you have to pay more...) that you know from the outset you can't afford.
Yes, I think you're misunderstanding it a bit, so let me explain. Now we know we can't afford it, but back then, we didn't know that we couldn't afford it when we took out the loan. Our plan was to refinance it or sell the home for a profit. We thought that the home would only increase in value. We did not think that the value of the home would drop. We trusted Indymac's decision that we could afford it. We also didn't know about all the corporate greed behind artificially inflating the values of real estate. We didn't know what the banks did to make those values go so high. We also didn't know that we would have to pay principal on the loan at some point. We thought our loan was interest only for 30 years. I just re-read this paragraph to my husband to make sure this is all correct, and he nodded his head in agreement.

Another thing I wanted to add for those who are saying what if the value recovers really soon within just a few years. Realistically, no the value will never recover any time soon, and probably never. The reason is because those high values of the houses never existed in the first place because of all the knowingly "toxic loans" that the banks were making. Also, the time frame of these toxic loans (starting around 2003) was the first time in history of the whole mortgage lending industry, that banks ever decided to do toxic loans. If toxic loans caused the prices of the houses to artificially inflate, then the values of the homes should never recover because the toxic loans are never going to happen again, at least not in our life times.

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#74 of 153 Old 04-16-2009, 02:56 AM
 
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You bought a house for a half a million dollars, and thought you'd only pay interest during the entire life of the loan? Did you think the half a million was a gift from the bank?

It's making more sense how you got into this mess, I just still don't quite get it

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#75 of 153 Old 04-16-2009, 03:20 AM
 
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You bought a house for a half a million dollars, and thought you'd only pay interest during the entire life of the loan? Did you think the half a million was a gift from the bank?
Yes, we thought that "interest only" meant "interest only," not interest and then principal later on. The term "interest only loan" is deceiving.

Everything made sense to me when I saw "The House Of Cards" documentary. I had no idea that lending institutions no longer cared about borrowers' creditworthiness (as long as they were raking in money) and they had decided to make loans to everyone they could, no matter how bad of a loan it would be.

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#76 of 153 Old 04-16-2009, 03:25 AM
 
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We made the final decision that we are walking away from our home too. We did a zero downpayment, interest only loan that demands we pay principal in a few years, for which we'd never be able to afford. Yet Indymac Bank made this loan to us for a house we could not afford. We have a So. CA 1955 home that we purchased for $565,000 in December 2006, and right now at best the value would be about $320,000. My husband just took our mortgage off auto-pay, so starting in May, we'll be living in this house for free for 6 months+, saving us the $3,200 monthly mortgage payment.
But where is the personal responsibility/accountability? Did the bank MAKE you take that loan? The one you knew you could not afford???? Did you expect your income to change that drastically from 2003 - 2009 so that you could eventually afford your home?? This is the part that is very hard for me to understand. I could have bought a home this way too, & chose not to! It is not responsible.

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#77 of 153 Old 04-16-2009, 06:28 AM
 
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Our plan was to refinance it or sell the home for a profit. We thought that the home would only increase in value. We did not think that the value of the home would drop. We trusted Indymac's decision that we could afford it. We also didn't know about all the corporate greed behind artificially inflating the values of real estate. We didn't know what the banks did to make those values go so high. We also didn't know that we would have to pay principal on the loan at some point. We thought our loan was interest only for 30 years.
Wait... you have the...audacity... to say that it's the bank's fault and yet you did NOTHING to educate yourself about homebuying before you took the plunge to buy the single most expensive item you will EVER buy?

The greed I see is yours. You actually thought that on an interest-free home, you DON'T pay the principal? I mean, that doesn't even take doing serious research to understand that could not possibly be the case. I honestly cannot even wrap my head around the idea that someone would think that. Then you assume your home value is going to go up and make you even MORE money. Not only do you get to live in your home without actually paying for it, but you get to make a profit off of it? I am sitting here with my to know that there are still people who feel so entitled. You are upset that it lost value, but you would have happily taken the profits if it had increased in value. Sorry... investing doesn't work that way. Investing involves risk. If you are going to treat your home as an investment to realize returns, then you need to stomach the losses, too.

Your financial problems with your home are completely of your own making.

And I don't think you are even coming close to understanding why this collapse happened. The collapse was caused by inflated values from *credit default swaps and derivatives*. Where it is the BANK'S fault is when there was actual predatory lending. I don't see predatory lending in your case. Predatory lending is doing something unethical such as when the mortgage company does a bait and switch telling you one interest rate, then writing in a higher one at the closing (or the above poster's example where the rate jumps even though the bank's terms were met). Yes, these things were done, and yes, it is the fault of the banks in those cases. But then they packaged up these mortgages and traded them on the market without them having real value. That's the governments fault because of deregulation.

But in your case... you knew it was an "interest-only" loan. It would have taken only a few hours of reading to learn about your financing options. It would have taken 10 minutes to google "interest-only loan" and learn what terms of such a loan are. There are plenty of resources that explain it in lay-terms. You chose to not educate yourself.
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#78 of 153 Old 04-16-2009, 06:36 AM
 
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Yes, we thought that "interest only" meant "interest only," not interest and then principal later on. The term "interest only loan" is deceiving.
Not to anyone with the wit to read the paperwork.
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#79 of 153 Old 04-16-2009, 07:52 AM
 
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"Loan" means they loan you the money. I can't fathom how anyone ever thought they wouldn't have to pay back the principal.
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#80 of 153 Old 04-16-2009, 08:54 AM
 
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Wait... you have the...audacity... to say that it's the bank's fault and yet you did NOTHING to educate yourself about homebuying before you took the plunge to buy the single most expensive item you will EVER buy?

The greed I see is yours. You actually thought that on an interest-free home, you DON'T pay the principal? I mean, that doesn't even take doing serious research to understand that could not possibly be the case. I honestly cannot even wrap my head around the idea that someone would think that. Then you assume your home value is going to go up and make you even MORE money. Not only do you get to live in your home without actually paying for it, but you get to make a profit off of it? I am sitting here with my to know that there are still people who feel so entitled. You are upset that it lost value, but you would have happily taken the profits if it had increased in value. Sorry... investing doesn't work that way. Investing involves risk. If you are going to treat your home as an investment to realize returns, then you need to stomach the losses, too.

Your financial problems with your home are completely of your own making.

And I don't think you are even coming close to understanding why this collapse happened. The collapse was caused by inflated values from *credit default swaps and derivatives*. Where it is the BANK'S fault is when there was actual predatory lending. I don't see predatory lending in your case. Predatory lending is doing something unethical such as when the mortgage company does a bait and switch telling you one interest rate, then writing in a higher one at the closing (or the above poster's example where the rate jumps even though the bank's terms were met). Yes, these things were done, and yes, it is the fault of the banks in those cases. But then they packaged up these mortgages and traded them on the market without them having real value. That's the governments fault because of deregulation.

But in your case... you knew it was an "interest-only" loan. It would have taken only a few hours of reading to learn about your financing options. It would have taken 10 minutes to google "interest-only loan" and learn what terms of such a loan are. There are plenty of resources that explain it in lay-terms. You chose to not educate yourself.
Velochic...I want to copy/paste this post to read to *every* *single* *person* who blames this financial mess on the greedy banks. I agree with every single word you said. For the most part there was plenty of greed/entitlement going around everywhere.

I simply (and I have said this before) cannot fathom signing a financial agreement as HUGE as a home loan and not reading it and doing *my best* to understand the terms. Its like the old joke about having a bridge to sell, ya know.

People need to stop blaming the just the banks.

Did I like that my property values went up-sure. Was I darn glad that I bought my house right as the property values began their climb to peak here-sure. Could my family be living closer to our extended family-sure. We chose not to become 'house poor' and have one of us SAH. Can we still afford that-yep. Now the biggie-do we have equity still-YES.

The country needs to stop blaming the banks and take a good long hard look in the mirror. There is plenty of greed to go around and a good portion of it is right there in the reflection.

There should be major ramifications, beyond ruining credit scores for a measly 7 years to those people who are trying to yet again-beat the system by intentionally foreclosing on their property. That IMO is just as bad as the "credit default swap derivative" mess created by the banks.

If I sound judgmental I am. No apologies here.

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#81 of 153 Old 04-16-2009, 09:21 AM
 
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okay, morals and ethics aside here, some things to consider--
defaulting on a mortgage is not akin to stealing or any big bad thing---the lender gets the return of the house. Could look at it in simple form as taking the vacuum back to walmart after realizing it was more vacuum than you needed and shouldn't have spent your money on it. They get a vacuum back.

Assuming you foreclose, be sure not to get too hasty with moving out. You're looking at being able to "squat" as it were, for perhaps longer than a year. That's a lot of money you can save up or pay down other debt with.

The truth is that people who have done a bankruptcy or foreclosure can rent something. Maybe not their ideal place but there's a market for them, that's for sure. Of all the folks I know going through this very thing--nobody has had awful ramifications--some pinches, yes, and obviously no credit worthiness, but credit is what got them in the pickle in the first place and it's best for them not to use it anyway.....
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#82 of 153 Old 04-19-2009, 11:02 AM
 
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We're back! Thanks for your patience.

Since this thread is on its 3rd and final try, we are asking that from this point onward, you refrain from sarcasm of any kind and keep the disagreements respectful, informative and educational.

Thanks!

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#83 of 153 Old 04-19-2009, 11:15 AM
 
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I'm confused about how the mortgage you signed 2 or 3 years ago is costing you more and more? Especially if the value is decreasing, your property tax should be decreasing as well. Contest your assessment if you have not seen a decrease.
Because the vaule of your home decreases it doesn't make your taxes do the same. It can take years for that to happen.
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#84 of 153 Old 04-19-2009, 11:24 AM
 
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Originally Posted by llamalluv
I'm confused about how the mortgage you signed 2 or 3 years ago is costing you more and more? Especially if the value is decreasing, your property tax should be decreasing as well. Contest your assessment if you have not seen a decrease.
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Originally Posted by marsupialmom View Post
Because the vaule of your home decreases it doesn't make your taxes do the same. It can take years for that to happen.
llamalluv is correct. Municipalities assess property taxes on a certain schedule - every two years in some counties, or every four years in others, say. At assessment, the county assessor looks at value of the property over the past X years (since the prior assessment) and reassesses a % of tax based on the new value. (So, marsupialmom, YES, if your home value goes down, your next tax reassessment will, too - unless your counties' voters have approved enough other, new levies to make up to the tax decrease or something.) In the 1990s housing bubble, taxes kept going up because property values generally kept going up. But now that the bubble has burst in most parts of the U.S. (and some parts of Canada), tax assessments are coming due and most taxes are dropping. (And that is a big reason that counties nationwide are having huge budget problems, because a large part of county income is property taxes.)

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#85 of 153 Old 04-19-2009, 11:30 AM
 
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You also want to look into Deed in Lue of Forclosure.

I also think you need to check in to this needing a house to feel secure. Even the things you are wanting yard, et. isn't going to necessarily make you happy. We are seeing that home buying isn't all it is cracked up to be. I would love to get out of my home. I can't.

I can't afford the work that needs to be done. Home ownership is expensive and a lot of work we can't do.
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#86 of 153 Old 04-19-2009, 11:35 AM
 
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Originally Posted by Ellien C View Post
For both the OP and Boobybunny, the thing about rent is that you have no control over the rent going up. What houses rent for now may not be what they rent for once the market rebounds. But your mortgage amount will always be the same.

It seems to me like you're doing the worst - buying at the peak and "selling" at the trough. Real estate prices do go up in the long run. Is there any chance of hanging onto the house for the intended 5 years and then selling? The market should rebound by then. And it would preserve some options for you.
You are not correct about the morgage ammount always being the same. Mine has gone up 24% because of Taxes and over inflated assestments. My house was assessed for 65000 8 years ago. A year ago 125000. Now 90000. The way they figure out taxes is on what homes are selling for. Guess what homes are going into forclosures and ARE NOT SELLING. Doesn't help reassement when the houses most like mine aren't selling.

We also have elderly people in our area having problems because they are being Taxed of of their home.
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#87 of 153 Old 04-19-2009, 11:38 AM
 
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Originally Posted by Marsupialmom View Post
You are not correct about the morgage ammount always being the same. Mine has gone up 24% because of Taxes and over inflated assestments.

We also have elderly people in our area having problems because they are being Taxed of of there home.
So has the mortgage gone up, or have the escrow payments for taxes gone up? Or both?

And, you can fight tax assessments....

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#88 of 153 Old 04-19-2009, 11:55 AM
 
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Originally Posted by Marsupialmom View Post
You also want to look into Deed in Lue of Forclosure.
Deed in lieu of foreclosure does not help when you are upside down on your mortgage. That only works if you owe less than or equal to the equity in your home. Unfortunately, this option has almost disappeared for those that decided to put little to nothing down on homes that are now depreciating.

I believe that this practice has been replaced mostly by short-sale practices.
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#89 of 153 Old 04-19-2009, 04:57 PM
 
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Originally Posted by Marsupialmom View Post
You are not correct about the morgage ammount always being the same. Mine has gone up 24% because of Taxes and over inflated assestments. My house was assessed for 65000 8 years ago. A year ago 125000. Now 90000. The way they figure out taxes is on what homes are selling for. Guess what homes are going into forclosures and ARE NOT SELLING. Doesn't help reassement when the houses most like mine aren't selling.

We also have elderly people in our area having problems because they are being Taxed of of their home.
But there's a difference between the actual mortgage payment (principle and interest) and property taxes (which you may pay into an escrow account held by your mortgage lender). If you have a fixed rate mortgage, your principle & interest payment will NOT change through the years. But it is certainly possible and almost guarenteed that taxes will go up at some point in time.

I understand that different municipalities assess properties in different ways. But it has been my experience that our home has been assessed to be worth less in 2009, and we are therefore being asked to pay less in property taxes this year. I know that this isn't true across the board, as I know people in other cities whose property taxes have not decreased.

Regardless, property tax increases affect BOTH owners and renters. Owners will pay increased property taxes directly to the taxing authority. Renters will pay for property tax increases via increased rent. If property taxes go up, landlords will increase their rental rates accordingly.

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#90 of 153 Old 04-19-2009, 06:59 PM
 
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Originally Posted by ThereseReich View Post
Yes, we thought that "interest only" meant "interest only," not interest and then principal later on. The term "interest only loan" is deceiving.
So did we We thought the downside (as explained to us by the broker) was that it meant we'd be building up no equity in the house for the first ten years, and that was the reason, the only reason, these loans weren't desireable. We were also told we could easily refinance in a few years if we wanted. We trusted our broker, and didn't read every single piece of paper presented to us at closing - we accepted the broker's verbal explanation for each paper, and signed.

Fortunately our mortgage payment doesn't go up until 2017. We have some time to try to figure things out.

I would STILL not realize what interest-only REALLY meant if I hadn't read about it here, on MDC. Our loan has been sold several times since we bought the house. Its currently with Indymac, and they can't even tell us what the monthly payments will jump up to in 2017 - they don't know or can't access the paperwork or something.
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