Anonymous wrote:

Anonymous wrote:But....can you still afford the payment? That's the question. You still have to live somewhere. If you stay long enough, you will pay the fucker off. So I don't buy the "OMG, I will never have any equity EVER!" argument, ESPECIALLY not in Northern Virginia. People are constantly like "OMG, my house lost 50K!" Meanwhile, 50K is less than 10% of their house value.

Since the market has crashed and the economy is in the Johnny Crapper, its not hard to understand that between 2006 and now, everything being the same (which it isn't) people on average are making less income. Thus if they could barely afford their house they can easily tip into not affording the house. From 2006 to 2009 home prices in NOVA have decreased by more than 50K (think 100-150K) AND in that same time frame property taxes have increased, adding more to that bottom line.

IF you lose your job and need to leave you either risk a short sale on your record, cough up 100K immediately, or rent out the house. However, the rent price = to your mortgage no one will pay to rent your house, so you'd have to rent for less than the mortgage and still pick up the tab for whatever is left AND pay for any repairs. Does that make sense? It's a HUGE money hole.

What you are saying makes perfect sense to me!! that IS us. Approx 6 years ago, my neighbors sold their house for $425,000. Not long after that, the market began to tank. I have sat and watched it go down down down. Right now in our neighborhood for a comparable house, IF you are lucky, houses are selling for $175,000-200,000. more than $200k difference. We owe almost $300k. And we need to make a move to care for aging parents, therefore if we let the house *go* we are going to lost almsot $100k. If i can get out of here breaking even I would be happy. As for renting, you are right. IN order to rent the house, I need to upgrade some stuff, which will cost $$$. Then we MIGHT get lucky enough to get $1500-1600 a month. BUT we currently pay $2050 a month plus taxes twice a year equaling $3k+

When we bought our house, I was shocked at how easy it was to get a mortgage. Our real estate agent kept pushing us to spend more. She kept saying we could easily afford a bigger house. And when we financed, they tried to push us into one of those adjustable mortgages. I had to finally had to ask the lady point blank why on earth woudl I ever consider doing an adjustable mortgage when I could lock into a low mortgage for 30 years. She laughed (as in, "you got me") and backed off.

My point is, I can see how someone could easily get caught up into buying more than they can afford or pushing their incomes. Then their adjustable mortgage goes up at the same time their house value goes down. And they can't refinance because suddenly their loan amount is worth more than their home. So they legally CANNOT get a loan for more than the value of their house. This is why people freak out when the value of their house declines. Because it impacts their abilty to refinance. I actually think this law/rule needs to change. If you have a mortgage on a house, you should be allowed to refinance for that same amount.

So, they are stuck paying a higher mortgage, which they can't get out of through re-financing and can't get out of from selling due to the crappy market. Then - one of them loses a job or gets paid less or has a kid (I don't know about you, but the kid expense amazed me). And suddenly, you are under water.

Because most of the people that took out starter home loans for 5 year arms planed to only be in the home for five years or less

in my case, it was a whole lot of bad decisions with an ex husband. We bought our house years ago, and then the refinancing game began. Get a better rate, consilidate, get money out of the deal, etc etc etc. Ex had extreme spending habits and each time we refi'd over the years (we are talking over 20 years in the house) and we were offered money in the deal, he took it. Yea, stupid. I was young and have learned a hell of a lot, way too late. So now the house is mortgaged at 3.5 times the original amount of the purchase price. After ex walked out he left me hanging with more cc debt and a home equity loan he refused to pay anything on (he figured it was tied to the house an he didnt have the house so not his debt, even though it was most of HIS cc and HIS truck in the deal). When I refi'd to get the house out of his name, we had to roll everything in to the new mortgage, hence the reason why wI am at this point. It sucks because we need to sell the house so we can move and the house isnt going to sell for what we owe, hence freaking out about it.

Anonymous wrote:But....can you still afford the payment? That's the question. You still have to live somewhere. If you stay long enough, you will pay the fucker off. So I don't buy the "OMG, I will never have any equity EVER!" argument, ESPECIALLY not in Northern Virginia. People are constantly like "OMG, my house lost 50K!" Meanwhile, 50K is less than 10% of their house value.

Since the market has crashed and the economy is in the Johnny Crapper, its not hard to understand that between 2006 and now, everything being the same (which it isn't) people on average are making less income. Thus if they could barely afford their house they can easily tip into not affording the house. From 2006 to 2009 home prices in NOVA have decreased by more than 50K (think 100-150K) AND in that same time frame property taxes have increased, adding more to that bottom line.

IF you lose your job and need to leave you either risk a short sale on your record, cough up 100K immediately, or rent out the house. However, the rent price = to your mortgage no one will pay to rent your house, so you'd have to rent for less than the mortgage and still pick up the tab for whatever is left AND pay for any repairs. Does that make sense? It's a HUGE money hole.

Anonymous wrote:But....can you still afford the payment? That's the question. You still have to live somewhere. If you stay long enough, you will pay the fucker off. So I don't buy the "OMG, I will never have any equity EVER!" argument, ESPECIALLY not in Northern Virginia. People are constantly like "OMG, my house lost 50K!" Meanwhile, 50K is less than 10% of their house value.

The entire nation doesn't live in No. Virginia. Houses underwater are crippling this country. You will have to pull yourself out of the DC bubble to get that. The people that are paying their underwater mortgages are stuck in the same neighborhood as people who lose their jobs, get transferred to other parts of the country, etc. So, even if you are paying you and your neighborhood feel the ripples.

But....can you still afford the payment? That's the question. You still have to live somewhere. If you stay long enough, you will pay the fucker off. So I don't buy the "OMG, I will never have any equity EVER!" argument, ESPECIALLY not in Northern Virginia. People are constantly like "OMG, my house lost 50K!" Meanwhile, 50K is less than 10% of their house value.

Seriously? Can't sell, ever. Equity lost. What's not to get?

Let me guess. You bought your house for under $250,000 and its now worth $700,000 or your sold it and now sit on the pile of money wondering why everyone complains about real estate these days because, I mean, let's face it you did your research and bought at the best possible moment anticipating 300% increase in prices over a decade or two. So anyone that bought in 2006 was a complete moron because clearly the markets would crash in 2008 from predatory lending practices bundled as AAA-grade loans. Clearly the professionals at Lehman Brothers, Countrywide, etc saw that coming too but decided to let their companies go belly up.

Since you've been living under a rock, I'll clue you in. Mortgages in 2006 and there 'bouts were given 1) for >40% of HHI 2) no money down and 3) ARMs were pushed or the only offer. So people took out insane loans, had no equity because the housing prices were increasing so fast it would build automatically, and ARMs that reset in 5 years. The best ARMs could potentially price you out in a year, the worse would do that immediately. The only reason why the housing market hasn't absolutely plummeted is because the Fed is holding interest rates a 0%. Guess what happens when that rises? All of the underwater homes with ARMs begin defaulting if they haven't already because they can't refinance or sell and probably can barely afford the mortgage while underemployed much less when the interest rates start increasing again.

Because some of them were wrong about being able to afford it...

You're stuck in it--can't sell. For many, it could be a very long time before they have enough equity to have options.

I agree. Not sure why that would make a difference. Just that you can't move?

Yaaaaaawn.

I guess because they can't sell it or refinance it. It could also be a problem if they had interest only loans so they are not paying down principal and have lost value (although even then the payment shouldn't change?). But otherwise you are right - the payments shouldn't have changed if they had a fixed rate loan (which could be a big if).

I really don't get this, I'm not trying to be condescending. When you bought the house, you paid what you thought it was worth. You took a mortgage based on what you could afford (right?). The house went down in value, but...why are you now drowning? Aren't you paying the same as what you started with? Why since the house is now worth less, can you not afford it?