My Personal Housing Crisis

[Chardon]

Is this why the economy is in the toilet?

 

[Notorious]

You're not taking inflation into account. If someone bought a house for $120k and sold it for $130k after 30 years of ownership, they made an unwise investment. $120,000 in 1985 is equivalent to $265k in 2015. So, if they sold their house for $130k after 30 years, they "lost" a hell of a lot more than $80,000.

Also, if they were to rent a similar house, they "lose" even more than $80k. I bet you charge your renters much more than the $500/month it costs to cover your mortgage/taxes/insurance.

Actually I had the chance to buy my dream home and rent for about $50 less than my costs. I couldn't afford both and I couldn't sell the other. Found a dude who wanted a house and I help him out and he help's out. He'll buy the house when he's ready and I'll give him a great deal.

 

[Notorious]

This wasn't an option because I would have been financially crippled. 30k was just for the foundation repairs.

If I borrow the money from someone, I have to continue to make my mortgage payments while paying back a new borrower for the repair costs. I simply didn't make enough money to live on had I gone this route.

I guess this is where I fault the bank a little bit. Had they offered to suspend mortgage payments for 10 months, I probably could have swung all of this and would have been living there since.

I'd try to work something out with the bank. This situation sucks, but I feel you'll be better off to try and make it work. One of my friends stopped paying his when he lost his job. He found a new job and went and made a deal with the bank and they in turn lowered his payment for 10 years. You are in a hole for sure and I'm wishing you the best.

 

[gourimoko]

This wasn't an option because I would have been financially crippled. 30k was just for the foundation repairs.

If I borrow the money from someone, I have to continue to make my mortgage payments while paying back a new borrower for the repair costs. I simply didn't make enough money to live on had I gone this route.

I guess this is where I fault the bank a little bit. Had they offered to suspend mortgage payments for 10 months, I probably could have swung all of this and would have been living there since.

Bro, I feel for you, probably more than anyone here. In the mortgage crash my family lost a tremendous amount of wealth and my parents came very close to losing their home. So, like a lot of folks here, I can sympathize with your situation.

With that said though, I think @Notorious is actually right here.

I would advise you to do anything you possibly can not to default, and not to file bankruptcy. If you have a good paying job, I would try to get a loan for the $30k, or do the repairs piecemeal if at all possible. I'm not in the situation so it's hard for me to get a clear picture of what your options are, but I would try whatever is possible to pay your mortgage.

How is your credit btw? Do you have any assets? 401k you can cash out? Anything to borrow against?

 

[Sumac13]

This dude says he has a good paying job. It looks like he just doesn't want to pay $180k for a $150k house. I see so many people with this line of thinking. My $200k is now at the moment only worth $160k so I'm turning in the keys. So many people I know right now living with Mom and Dad or a relative because they didn't want to pay more for a house temporarily worth less.

Here's why it's absolutely retarded.

I bought my first house in 2003, it's now rented. I "paid" to the seller $120k. I put $20k down. I took out a 30 year loan since I don't have that kind of cash laying around. My payments with insurance and taxes removed are $530 a month. Multiply that by 12 and I'm paying $6,300 a year just on the mortgage. Multiply that by the 12 years I've had the mortgage and I've paid $76k in payments plus $20k down. I've now paid $96k of my money for a house "worth" $120k and I have 18 years left to pay. In 2008 the value dropped to $80k. Last year it was around $110k. My principal is now $70K. So I've paid $96K for a current $40k of equity in 12 years. In 2008 that house was worth $80k and I owed $88k with $52k already payed. Most of my idiot friends turned their keys in at this point. Let's say I pay another 18 years of my mortgage payment at $531 a month. I'll pay another $114k on top of the already $96k I've paid. So when everything is said and done I'll have paid $210k for a $120k house.

Most people sell that for 130k and say "I made $10k". Wrong you lost $80k.


If you don't buy a house with cash you're not paying anything even remotely close to sticker price. Suck it up, it's embarrassing when you live with Mom and Dad for 7 years after moving out because you torched your credit to "not pay more for something worth less." You can't even put an apartment in your name after letting go of the house.

The worst is I can't tell you how many moved out and then had Mom or Dad put a new house in their names and then that person lost their jobs or some other tragedy struck again.



Get over the sale price of the house. It means nothing. If you didn't buy it in cash you're never going to make money on it period. Add in taxes, insurance and maintenance and unless you're renting in a desirable area you've lost so much money at this point all you can do is see it through for that equity for the next house.

When you mortgage a house you will get a nice home to live in and a nice chunk of cash at a later date. This is not the stock market though. Buying a house on a mortgage is not putting your money to work. It's a loss spread out over 30 years because you needed someone else to finance it.

A question: If one doesn't have an option to move back in with folks or a family member, and decides to rent instead. Is renting still a better option?

For example: rent of $800/mo*12mo.*30yrs=$288,000. You would be out $288,000 with nothing to show for it. This assumes that rent stays stable at $800. Also, would a homes value only increase by $10k? I realize in the worst of times, the houses value may bottom out, but I would think a $120k house would increase more than $10K in 30 years (assuming neighborhood doesn't turn to shit).

Aslo, lets say house costs $120, I put down $20k and invest the other $100k. Would I still come out behind?

Or am I missing something? I am not good with finances, but these questions just came to mind.

 

[Cratylus]

OK, I'm confused. Is the OP making his mortgage payments on the damaged house or not?

 

[Lee]

OK, I'm confused. Is the OP making his mortgage payments on the damaged house or not?

My impression is he stopped making his mortgage payments and he asked the mortgage company for money to help pay for the repairs on the place.

 

[Cratylus]

OK, a few questions for the OP...

1) What do you do for a living?
2) What is your monthly take home pay?
3) What is your monthly mortgage payment?
4) What kind of car do you drive? Is it paid for? If not, what is your monthly payment on it?

 

[Mr. Orange]

You're not taking inflation into account. If someone bought a house for $120k and sold it for $130k after 30 years of ownership, they made an unwise investment. $120,000 in 1985 is equivalent to $265k in 2015. So, if they sold their house for $130k after 30 years, they "lost" a hell of a lot more than $80,000.

Also, if they were to rent a similar house, they "lose" even more than $80k. I bet you charge your renters much more than the $500/month it costs to cover your mortgage/taxes/insurance.

Nah, Notorious is right. You have to take into account Cleveland/NEO real estate. One of only 3 markets in the US last year that housing prices declined. I have known so many people that bought pre-crisis and are upside down and underwater. Even when they try to sell, it takes years unless you are in a great suburb like Rocky River or Hudson.

Better to just rent, not pay property tax, interest, realtor fees, mortgage insurance, repairs, heating/cooling, yard maintenance, etc. Put that down payment in a diversified mutual fund portfolio, get your 5-8% a year. That's what I do. Sometimes I wish I had more space and a yard, but more often I don't and I can just go to the parks nearby.

Anyways, tough spot OP. I feel like Lee knows what he is talking about.

 

[FiveThous]

Nah, Notorious is right. You have to take into account Cleveland/NEO real estate. One of only 3 markets in the US last year that housing prices declined. I have known so many people that bought pre-crisis and are upside down and underwater. Even when they try to sell, it takes years unless you are in a great suburb like Rocky River or Hudson.

Better to just rent, not pay property tax, interest, realtor fees, mortgage insurance, repairs, heating/cooling, yard maintenance, etc. Put that down payment in a diversified mutual fund portfolio, get your 5-8% a year. That's what I do. Sometimes I wish I had more space and a yard, but more often I don't and I can just go to the parks nearby.

Anyways, tough spot OP. I feel like Lee knows what he is talking about.

Don't forgot the 2-4% of the purchase price you'll pay annually on home repairs.

 

[Kyrieville]

Nah, Notorious is right. You have to take into account Cleveland/NEO real estate. One of only 3 markets in the US last year that housing prices declined. I have known so many people that bought pre-crisis and are upside down and underwater. Even when they try to sell, it takes years unless you are in a great suburb like Rocky River or Hudson.

Better to just rent, not pay property tax, interest, realtor fees, mortgage insurance, repairs, heating/cooling, yard maintenance, etc. Put that down payment in a diversified mutual fund portfolio, get your 5-8% a year. That's what I do. Sometimes I wish I had more space and a yard, but more often I don't and I can just go to the parks nearby.

Anyways, tough spot OP. I feel like Lee knows what he is talking about.

When you rent, you pay for all of those things. When the landlord's costs go up through increased taxes, insurance, etc... rent goes up with it.

My home value has increased by 20% over the past 18 months. My mortgage is $550/month, after insurance and taxes. My home will rent for $1100-1300/month. Even if I only get $1000 when I rent it out, that's $450 over my monthly cost. Renting is not cheaper, unless you're content with living in an apartment that is in a sketchy area, or a small apartment in a decent/good area.... but you can get a 4 bedroom house in any sketchy neighbor in Akron, Cleveland, Youngstown, etc. for $5000-15000, if you're content with that living situation.

Always buy in a good suburb.... at least in Ohio.

The benefits of renting are not being anchored down and not having to worry about major up front costs (new furnace, water line damage, or a situation like the OPs).

 

[MoGottiFor3]

Just dropping by to say that reading all this shit makes me glad I'm still only 20 years old.

 

[Scrote Squad]

OK, a few questions for the OP...

1) What do you do for a living?
2) What is your monthly take home pay?
3) What is your monthly mortgage payment?
4) What kind of car do you drive? Is it paid for? If not, what is your monthly payment on it?

1. Government job.
2. $4200 net.
3. $1200.
4. Chevy Tahoe. Paid off.

And yes, I quit making my mortgage payments in August.

 

[Cratylus]

1. Government job.
2. $4200 net.
3. $1200.
4. Chevy Tahoe. Paid off.

And yes, I quit making my mortgage payments in August.

It was a huge mistake to stop paying on the mortgage as now you've ruined your credit which will make getting an affordable loan that much more difficult.

So you take home $3000 each month AFTER your mortgage is paid and you were concerned about a personal loan to fix your basement??? Something doesn't add up here.

This is definitely doable if you're willing to work at it and make a few temporary sacrifices. Here's what you do...

1) If you haven't paid your mortgage in 9 months, you should have an extra $10,800 saved. Use some of that money to help pay for the basement repairs. Use the rest of the money to start getting caught up with your mortgage payments.
2) Sell your Tahoe and buy a cheap, reliable used car that gets better gas mileage. Yeah, it'll suck for a while but you'll get used to it. Sometimes you have to take a step back in life in order to move forward in the long run. This is one of those times. Depending on what year/trim package your Tahoe is, that would get you a third to half of the money you need to fix the basement, and you'd see additional savings every month in less fuel costs. Apply every penny of those savings directly toward the loan for the basement repairs (#4).
3) Hold a yard sale and sell some collectibles to raise more money for this endeavor. Chances are, you have stuff you don't really "need" that you can turn into cash.
4) Get a personal loan from bankrate.com. For a $20,000 loan at 10% for 5 years your payments would be about $425/month. If you don't want to go that route, borrow money from your 401(k) or retirement plan where you work.
5) To help with the loan payments, you can always pick up a part-time second job (like delivering pizza three nights a week or on the weekends). Use that extra money to help pay the loan you will take out to finance the repairs to the basement. Once you get it paid off, you can quit. Yeah, it'll suck for a while. But again, sometimes you have to make sacrifices in order to meet your financial and other obligations.
6) Make some sacrifices in your eating and going-out habits. Don't get the Starbucks coffee every morning when you can make it yourself and save. Stop eating out two or three nights a week. Have a gym membership? Cancel it and work out at home. Drop or severely cut back your cable TV service. The more sacrifices you make, the quicker you can get the basement fixed and get caught up on your mortgage. Additionally, it'll serve as incentive to do this as quickly as possible instead of dragging it out.
7) Start paying your mortgage again.

 

[Scrote Squad]

It was a huge mistake to stop paying on the mortgage as now you've ruined your credit which will make getting an affordable loan that much more difficult.

So you take home $3000 each month AFTER your mortgage is paid and you were concerned about a personal loan to fix your basement??? Something doesn't add up here.

This is definitely doable if you're willing to work at it and make a few temporary sacrifices. Here's what you do...

1) If you haven't paid your mortgage in 9 months, you should have an extra $10,800 saved. Use some of that money to help pay for the basement repairs. Use the rest of the money to start getting caught up with your mortgage payments.
2) Sell your Tahoe and buy a cheap, reliable used car that gets better gas mileage. Yeah, it'll suck for a while but you'll get used to it. Sometimes you have to take a step back in life in order to move forward in the long run. This is one of those times. Depending on what year/trim package your Tahoe is, that would get you a third to half of the money you need to fix the basement, and you'd see additional savings every month in less fuel costs. Apply every penny of those savings directly toward the loan for the basement repairs (#4).
3) Hold a yard sale and sell some collectibles to raise more money for this endeavor. Chances are, you have stuff you don't really "need" that you can turn into cash.
4) Get a personal loan from bankrate.com. For a $20,000 loan at 10% for 5 years your payments would be about $425/month. If you don't want to go that route, borrow money from your 401(k) or retirement plan where you work.
5) To help with the loan payments, you can always pick up a part-time second job (like delivering pizza three nights a week or on the weekends). Use that extra money to help pay the loan you will take out to finance the repairs to the basement. Once you get it paid off, you can quit. Yeah, it'll suck for a while. But again, sometimes you have to make sacrifices in order to meet your financial and other obligations.
6) Make some sacrifices in your eating and going-out habits. Don't get the Starbucks coffee every morning when you can make it yourself and save. Stop eating out two or three nights a week. Have a gym membership? Cancel it and work out at home. Drop or severely cut back your cable TV service. The more sacrifices you make, the quicker you can get the basement fixed and get caught up on your mortgage. Additionally, it'll serve as incentive to do this as quickly as possible instead of dragging it out.
7) Start paying your mortgage again.

It's not quite as simple as you make it seem.

1. I got a new job in September of last year, making about $25k more a year than I did when the crisis happened.

2. I'm not sure making the repairs is even doable at this point. The house has been condemned by the City.

3. Even if I were to make the repairs, the basement walls are made of cinder block, reinforced. They aren't poured walls that you see in houses made today. There is literally no guarantee that if I fix the damaged wall that another storm doesn't come by and collapse another of the cinder reinforced wall. It's poor craftsmanship from the 1960's. I'd be devastated if I took the time/money to fix it and it happened again. Certainly you can see my concern there.

4. The bank is contacting me this week with a number that they will accept in a short sale. Due to the circumstances, if they give me a reasonable number, I already know a few contractors who would look to buy the property because of the location that it's in. Even if they don't hit the exact number, I'd probably be willing to write a check to cover the difference in order to avoid the massive hit to my credit.

5. As for my lifestyle, I'd hardly consider it lavish. I don't drink Starbucks or eat out that often. I pay my uncle monthly for living with him. Beyond that, I've built up a nice little savings nest egg.