Tell me how to get out of my underwater house

[Anonymous]

If I pay extra toward my mortgage each month, is that automatically paid toward principal? I guess so since there wouldn't be extra accrued interest for it to go toward, but I just wanted to make sure that I don't have to make some designation.

[Anonymous]

Anonymous wrote:If I pay extra toward my mortgage each month, is that automatically paid toward principal? I guess so since there wouldn't be extra accrued interest for it to go toward, but I just wanted to make sure that I don't have to make some designation.

You should definitely confirm that it is being applied to principal only--I believe we had to specify when we set up the online payments.

[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.

Exactly. OP did not give a reason for wanting to sell. Why would you assume the reason is that they "just don't want the house anymore" and not that something terrible happened? And then proceed to criticize the OP based on that assumption?

This seems to be a standard response on DCUM. DCUM financial posts always seem to dissolve into a nasty-fest that assumes the worst about the OP. Sometimes people just have bad luck you know, even people who make good financial decisions. And a lot of people inappropriately attribute their good fortune to superior decisions when in reality, it's just good luck. This forum could use a lot more humility.

[Anonymous]

Anonymous wrote:If I pay extra toward my mortgage each month, is that automatically paid toward principal? I guess so since there wouldn't be extra accrued interest for it to go toward, but I just wanted to make sure that I don't have to make some designation.

You need to check with your mortgage holder where additional payments go. Many banks will default pay additional amounts towards either interest or escrow, neither of which is as productive as applying it towards principal. Always make sure that any additional payments that you make are clearly flagged to go towards principal.

[Anonymous]

Anonymous wrote: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.

Think of it this way-if you had to rent for 3-4, you probably would have spent $30-40K in rent. Just curious, what is it about the house that really wants you to sell?

[Anonymous]

Anonymous wrote:

Anonymous wrote: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.

Think of it this way-if you had to rent for 3-4, you probably would have spent $30-40K in rent. Just curious, what is it about the house that really wants you to sell?

PP here. It's a condo that my husband bought by himself, and I've hated living here since the day I moved in. No storage space, undesirable neighborhood, bad location (for me; it's actually not bad for DC commuters), a few very annoying neighbors, no space for kids (and I'm not getting any younger). I could go on, but those are the basics.

[Anonymous]

Sounds like you could rent it out and come closer to breaking even than having to bring $50-60K to the table (the $30-40K that you're underwater plus sales commissions). Have you considered renting it for a year or two while you move somewhere more amenable and then selling when the market recovers?

[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.

Sometimes it makes sense to get out of a bad investment. If a business were doing it, there would be no criticism and they would be making a smart financial decision. If an individual does it, suddenly he or she is a horrible person.

[Anonymous]

This whole idea that it is immoral to walk away from an underwater house is part of the same morality that has so many people in the 99 percent voting for the ex-head of Bain Capital. It is like people in this country enjoy being screwed for the benefit of billionaires in the financial industry.

[Anonymous]

Anonymous wrote:This whole idea that it is immoral to walk away from an underwater house is part of the same morality that has so many people in the 99 percent voting for the ex-head of Bain Capital. It is like people in this country enjoy being screwed for the benefit of billionaires in the financial industry.

I don't follow the logic here. Surely Democrats like myself (and presumably like you) would agree that walking away from a financial obligation for the reasons the OP listed undermines the social contract and the greater good. It seems like more of an Ayn Rand perspective to suggest that it's fine to walk away from an obligation because it appears to be in our self interest.

If the OP and her husband couldn't afford the condo payments and were on the verge of bankruptcy as a result of meeting their obligations, it might be a different story. Instead, it seems she just doesn't like the place. That does not translate to "being screwed by billionaires in the financial industry."

[Anonymous]

8:15 again. BTW, OP didn't suggest walking away. If the condo is in a good location for DC commuters, you might crunch the numbers to see how you can do renting it for awhile.

[Anonymous]

We are about 80k underwater on a condo and, with two kids, we had to find more space. We were lucky enough to find great tenants (who pay most our mortgage - we do come up short, though) and bought a SFH nearby. It turned out alright. We researched every program available - refi would have cost us am arm and a leg plus our payments would have gone UP.

[Anonymous]

Anonymous wrote:

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.

Exactly. OP did not give a reason for wanting to sell. Why would you assume the reason is that they "just don't want the house anymore" and not that something terrible happened? And then proceed to criticize the OP based on that assumption?

This seems to be a standard response on DCUM. DCUM financial posts always seem to dissolve into a nasty-fest that assumes the worst about the OP. Sometimes people just have bad luck you know, even people who make good financial decisions. And a lot of people inappropriately attribute their good fortune to superior decisions when in reality, it's just good luck. This forum could use a lot more humility.

So true.

[Anonymous]

I think there might be some confusion about who's who here. I am the PP who hates the condo and plans to sell despite being underwater... not the OP, who doesn't seem to have posted recently.

Anonymous wrote:Sounds like you could rent it out and come closer to breaking even than having to bring $50-60K to the table (the $30-40K that you're underwater plus sales commissions). Have you considered renting it for a year or two while you move somewhere more amenable and then selling when the market recovers?

I have thought about it, and this is what we might have to do if the condo doesn't sell, but it would be a last resort. There are a few reasons I haven't seriously considered it:

--I could not be less interested in being a landlord.
--We'd probably still lose $400 a month.
--Values for these condos have declined significantly every year, with no sign yet of plateauing; for all I know, the unit will be worth even less a year from now.

I am also under the impression--and it may be inaccurate--that we would not be able to get another mortgage if we didn't sell the condo. But I'm seeing responses here that suggest people have gotten mortgages while still owning a previous property--anyone want to talk about how they did that?

(BTW, it's unlikely we'd have to bring as much as $60K to the table--the condo isn't worth enough for a $20K sales commission!)

[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?

Businesses that emerge from bankruptcy start on a clean slate. Homeowners who default on their mortgages do not. It's not good advice to suggest individuals act like banks. They aren't too big to fail. It will ruin their credit scores for a long time.