Tell me how to get out of my underwater house

[Anonymous]

I really don't think it is a big deal unless you are moving. You bought a house at a price that was worth it to you. You knew what the payments were. Who knows in 20 years it might be worth way more than it is now. Do you sell your stock at a low? Don't worry about the value today. There is a huge transaction cost in moving/buying/selling.

[Anonymous]

Hold your breath and kick like hell.

[Anonymous]

Is your mortgage owned by Freddie Mac? I think those also qualify for HARP. HARP II (New! Improved!!!) is supposed to actually get underway sometime in the next few months. Good luck.

[Anonymous]

Here is what we did. It won't necessarily get you out of the house any time soon, but (1) we didn't need to be out any time soon (we've been in 6 years and would like to be out in another 4-5 years) and (2) we feel better about where we stand and like we took control of the issue.

We were close to $40k underwater. Because rates are so low, we spoke to a broker and refinanced. You don't always have to have 20% equity to refinance. We brought cash to the table equal to the underwater amount, plus enough extra cash to create 5% equity. This reduced our monthly payment by over $800/month. That $800/month goes straight into our savings to replenish what we took out. We saw this as our best option because we didn't have enough cash (and wouldn't any time soon) to bring cash to the table to sell, plus pay the realtor fees, plus have enough for a good down payment on a new house. We also couldn't rent it out because the monthly payment was too much higher (in our minds) than what we could have rented the house out for. So now we have a little equity and we're slowing building more (not by the value going up of course, just by paying down the mortgage a little each month) and we're building our savings back up for a down payment on a house down the road. It's not an ideal situation obviously, and it also obviously requires that you have substantial cash that you can let go of, but sitting around feeling stuck was driving me crazy. I suppose we're still "stuck" but I feel like we're in control a little more now.

[Anonymous]

We are $30-$40K underwater and will be bringing cash to the table when (if) we sell this year. I've just about come to terms with throwing away thousands of dollars; getting totally free of this place, no matter what it costs, is worth it to me.

But if you don't want or need to sell anytime soon, you don't really have a problem. Save as much as you possibly can in the meantime, and perhaps you'll be able to break even in a few years.

[Anonymous]

Not trying to sound bitchy (but it will), suck it up. No one had a gun to your head when you signed on the dotted line. Don't get me wrong, banks piss me off, corporate greed is off the charts, but so is "keeping up with the Jones'". Too bad OP, you're stuck with your purchase, so keep paying your 2 mortgages. Did you sit down before your purchase and go through the "what ifs"? What if one of us lost our job? What if interest rates go up? Is our mortgage payment too high for anyone to help us if we need it? My 5 yr. old wants, wants and wants more. I ask him to wait, think about it for awhile, and he forgets that he ever wanted it.

You live in a house you can afford, you drive a car that you can afford, and that is that. Hope you have learned a valuable life lesson.

[Anonymous]

If you're like me, your stock portfolio probably dropped at some point in the last couple of years. Would you sell the stocks at a low price to be rid of the assets? Not if you were smart. You'd hold the assets (assuming the underlying financials were sound and they weren't junk bonds) and wait for them to come back up. Same with this house. It's not currently worth what you paid but unless you made a bad decision, it'll eventually be worth that price again. If you don't understand this, you shouldn't be a homeowner. There is always a risk in buying anything. (you probably haven't considered selling your car, which lost value the moment you drove it off the lot.)

[Anonymous]

Everyone saying they want to be "free" of the house, yet can afford the monthly mortgage, what are you looking to free yourself from? Are you trying to relocate?

[Anonymous]

Anonymous wrote:

Anonymous wrote:People like you are exactly why there is a housing mess.

You knew what the payment would be. You could afford it. You can still afford it. You just don't want to pay.

You are selfish and greedy. You should be ashamed.

If you're a business and you walk away from a real estate deal, it's just a business decision. Why is it different if you're not a business? Both are business transactions, and homeowners pay mortgage insurance for just this purpose.

By the way, the lenders made all those "you got a pulse? you can afford this mortgage! sign here!" because they're selfish and greedy.

Banks take all the benefits and none of the risk (they pursue homeowners legally for difference, and their loans are federally guaranteed). Why the corporate socialism?

Because there are direct consequences to the families that are your neighbors. Their home values decline when your house is sold as a foreclosure (or short sale). If they need to move, it becomes even harder for them. Strategic foreclosures and short sales are the "screw your neighbor" solution to your problem.

[Anonymous]

With all due respect to PP, I don't think anyone stays in a financially disadvantageous position to please their neighbors. And you wouldn't either. And your neighbors sure as hell wouldn't go through financial ruin to please you.

[Anonymous]

Facts for ant decision:
-bought before the bubble burst
- as of 2012 are 30-50k under what is owed v property appraisal
-have to live somewhere
-closing costs and moving costs for a replacement place to live
-moving costs if going into an apartment

Now if you can't afford the current mortgage, taxes, insurance, utilities that is a different scenario than just moving because of the appraisal difference.

If a replacement property is in a preferred location and was not something affordable when the original purchase was made then I'd look at the big picture. Assume the replacement property is also less than what it would have been at the time of the purchase.

[Anonymous]

Anonymous wrote:Not trying to sound bitchy (but it will), suck it up. No one had a gun to your head when you signed on the dotted line. Don't get me wrong, banks piss me off, corporate greed is off the charts, but so is "keeping up with the Jones'". Too bad OP, you're stuck with your purchase, so keep paying your 2 mortgages. Did you sit down before your purchase and go through the "what ifs"? What if one of us lost our job? What if interest rates go up? Is our mortgage payment too high for anyone to help us if we need it? My 5 yr. old wants, wants and wants more. I ask him to wait, think about it for awhile, and he forgets that he ever wanted it.

You live in a house you can afford, you drive a car that you can afford, and that is that. Hope you have learned a valuable life lesson.

I'm not the OP, I'm a pp who is also underwater and is on a long-term plan to pay our way out. But, yeah, you're right, your post is b*tchy. Of course we thought about those questions when we bought our now underwater place. And no, we didn't buy more house than we could afford when we bought it - even on one salary. But, things changed. Unemployment shot up to 15% in the city where we lived - not our fault - and we didn't expect that both of us would get laid off at the same time (both of us worked for companies that moved overseas) or that we would absolutely HAVE to move to find work, and as a result we have to rent our underwater property at an annual loss of $15k a year while we also double down on the principal to get to a point where we can sell. We are 100% responsible and are making the sacrifices necessary to get out of a bad situation, but this whole attitude of "you made your bed, now lie in it" ignores loads of larger economic conditions over which people have no control. I hope that when this happens to you someone chastises you about "valuable life lessons" and compares you to a 5 year old too.

[Anonymous]

I'm underwater on my condo in a "transitional" neighborhood in DC (Trinidad) bought in 2006 because I couldn't afford anywhere else. Owe about 184K on the condo, market value is probably around 160K. Have moved to Virginia (bought a house after DS was born) and rented the condo out. Taking a loss of $400 per month and sucking it up. Hoping to compensate some of it with my tax refund.

Would I like to be rid of it? Not sure. It's a hassle to pay more than I have to every month, but hoping that eventually the balance will go down and prices will go up, and in the meantime I'm collecting rental income.

[Anonymous]

The OP said they could handle the payments, and didn't say they had to move for any particular reason - they just don't want the house anymore. Nobody is saying that *all* people who short-sell or whatever are bad - some have factors like job loss, health issues, etc. You can't foresee everything when you buy. But someone who *can* afford the house but just doesn't want to pay for it anymore - that's a person deserving of our criticism. Sorry, but that's the price you pay. If you don't get that there's a risk to investing in anything, you shouldn't be making the investment.

[Anonymous]

Anonymous wrote:The OP said they could handle the payments, and didn't say they had to move for any particular reason - they just don't want the house anymore. Nobody is saying that *all* people who short-sell or whatever are bad - some have factors like job loss, health issues, etc. You can't foresee everything when you buy. But someone who *can* afford the house but just doesn't want to pay for it anymore - that's a person deserving of our criticism. Sorry, but that's the price you pay. If you don't get that there's a risk to investing in anything, you shouldn't be making the investment.

I tend to agree with this.

Listen, OP - do what others have suggested, start paying down your principal more aggressively. Do that or sell and bring $$$ to the table. There is no miracle quick fix just b/c you made a bad real estate decision. I don't blame you. Millions of people did the same thing. Most of us had no idea how bad the bubble would burst.

But be an adult and take some ownership over your decisions. If you want to walk away, fine - let the banks foreclose and ruin your credit. But what else exactly are you looking for?