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underthemosthigh@sbc... | Whats the best way to walk away from my house? |
Okay the market fell and I find myself paying way to much for something that is no longer worth the investment. I've put $35,000 in upgrades into a house that I bought for $305,000 and is now worth $168,000. I want out. I know i signed a contract and I can afford to pay the mortgage it just seems like such a bad deal now. No one's fault really but the truth is a terrible deal now so how do i get out with a minimum of reprucussions? |
 |
 
Linda R
 |
Poor thing !
I have the same experience , I build the house $417.000 and now I'll be lucky if I can sell it for $ 300.000. We are supposed to sell with a little profit or at least get our money back , but the way things are now we have to wait until the market turns around . I'm lucky , my house is free and clear . |
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appletini7
 |
I would suggest you hang in there and wait for the market to rebound. It always does.
Maybe you can rent the house out in the meantime. Have you loooked into that?
If you 'walk away,' your credit will be in bad shape for years to come. |
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markmyword
|
You do not mention the size of the mortgage however, most likely there is no good option to get out at this point. Since you can afford the mortgage, the bank will not allow you to do a short sale. If you default on the loan you will not be able to take out an additional mortgage for 3 years and your credit score will drop significantly.
Rent the house out and wait for the market to turn in 6 - 9 months, depending on the area you are in. |
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goz1111
 |
The bank will not let you just walk away from this without paying the consequences period, so not matter what option you choose to get rid of the house your credit will be damaged, unless you try and rent the house and supplement the difference until the market at least levels out some where in late 09
any other option short sale, foreclosure or just walking away will hurt your credit |
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A W
|
Where in the world do you live that your depreciated 60% in just a short time?? In all honesty, it sounds more like you paid $305,000 for a house that was worth closer to $200,000.
Personally, you need to just hang in there. The housing market will recover. It won't be overnight or happen instantly...it is going to take probably a good 5 years.
If you can't wait and want to bail out, then contact your lender and arrange for a short sale. It WILL reflect on your credit report for 7-10 years and will affect your credit score for at least 2 years.
Just like with BUYING a house, you need to think long term. You sound like you want instant gratification and that doesn't happen when you sell your house. Turning your house over to the bank WILL have long term repercussions. You need to decide which is better....having good credit and living in a house you can afford even though the value isn't there right now, or would you rather have credit for crap and be lucky if you can rent a dumpy apartment for the next 2 years. |
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blondienowbutnotb4
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I'm with the person that said hang in there and rent. If you could rent it out, it might pay for itself and once the market turns around you might be glad you stayed with it. It's never a good idea to jump into anything and panic. I would try to rent first, see where that takes you financially and then you can make some intelligent choices from there. Good luck. |
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SoCalCC
 |
Why walk away, just call the lender, let them know how you feel and would like to know about loan modification and/or principal reduction based on present value; otherwise, you're walking away from it.
They may say nay (based on your ability to make payments) but what a heck, you got nothing else to lose.
(i've seen several loan mods. happening right now)
And if it doesn't work, don't feel bad, later on you'll be able to buy the same house for less than 168K. |
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mjazenko
|
Hello there,
First off, real estate markets rise and fall just like the stock market. When you purchased your house, I will hazard a guess about 4 or 5 years ago, back then the real estate market was white hot, now the pendulum has swung back into the opposite direction. Those who purchased a house then saw their values increase. However, those purchasers won't see that so called 'extra vaue' until they sell. So what we have here are mostly paper gains. They look good on paper, but no 'extra money' into their pockets. On paper they have made $X or X% which won't be realized until they sell. Again, it looks good on paper until they take into consideration that they have to pay the commission to the real estate agent (5%), the lawyer to do the closing and land transfer taxes. I myself just sold my house, but not not for as much as I thought. You could sell your house now, which is the equivalent of selling your stocks when the market is down. I would suggest that you keep your house and try and pay it down as quickly as possible.If you do decide to sell, the bank will charge you a penalty for breaking the contract. A king's ransom at that!
You say you put about $35k in upgrades into your house, that is good. However, here is a dirty little secret that not even real estate agents will tell you: your $35k is actually worth $17,500 from a re-sale perspective. You've read that right: $17,500! Almost half of what you paid for upgrades. It also depends on what type of upgrades. Almost anything to do with the kitchen or bathroom is good. Cupboards, countertops, flooring to a lessor degree, upgrade bathroom fixtures, etc is good. Upgrading from carpet to say hardwood, is good. Upgrading the carpets, staircases, electrical fixtures, door handles, doors, not a good deal. A potential purchaser will not put too much stock into these non-essentials, read: they don't believe it and won't pay extra for it. I would suggest that you check out this website: www.aicanada.ca and check out their home renovation survey. Plug in some numbers, any number and see what happens.The results will surprise you and educate you at the same time.
My question to you though, is how do you know that your house has dropped that much? Did you have a real estate agent come in and take a look at your house and show the agent the upgrades that you did? Unless your in a really economically depressed area, then the value of your home will drop significantly, like in a one employer town. Chances are you are not, but I don't know your city or town. However, I would suggest that you get a real estate agent to come in a take a look around and let the agent do their research and get back to you. Then you can make your decision from there. I always suggest that you do your research first before jumping the gun. I hope this helps. |
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farleyjredfield
|
The fair market value is what the buyer and seller agree on. You made the agreement with the last seller so I beg your pardon it is someones fault even if they are sparkeled eyed at the house and have a lot of pride too much to admit the house price is/was inflated or have faulty appraisle. Ask for an appraiser who does "compairson appraisle" this way its fair and compaird to home the same size, neighborhood, age... Then add on your upgrades. It may be lower but your current rating seems out of line. Unless something like no grocery store for 40 miles (cant imigine this after buying and not knowing) or a power plant in the neighbors back yard, or a highway comming through has to be figured in then if thats the case you'll be on a list of "affected propertys" and have input on yea or nay plus may have recoop benifits if it comes on in.
Having pi--ed you off now I recomend staying in for the longer haul. It sounds like you bought this house with the intention of reselling it at a proffit. Some of your profitt is gone but your equity is still there. Wait for the market to reinflate, in your area right now it sounds like its too deflated. Some of the basis in your equity will come back pretty quickly (I figure with in 1 year 2 at most). You may still be top loaded and not be even but if your determined to sell you have agreed to suffer the consequences.
Dont assume that just because someone or the market says something is worth $XXX,XXX that tommolrrow it still will be. And don't put extra into anything until your goin gto turn it to a sale.
Having pi--ed you off somemore, rent it out isnt a bad idea except you still have to live someplace. If the rent wont cover all your expences including taxes and other repairs and maintenance mowing yard and the like rent is a worse option in my opinnion than living there. Your taking on more risk. Your question begs that you want to lessen your risk. Just because you can pay the mort. today dosnt mean you can pay the mort. and your rent to live someplace else, unless its right next to where you work and dont need transportation or have public transportation. No renting is not the best option in my opinion especially if you charge just the going rate / sqft or per bedroom. You'll have to add on a few hundred dollars to cover your additional risk, in my humble opinion. If your not ready to be a landlord though its no advisable to strap yourself to another new job right now.
The option left to you is communicate to your mort. lender your plans and see if you can work something out. This is a lot more eye opening to both of you and the lender shouldn't have loaned the money if the value has dropped so low in such a short time and being in the local market they will have a better idea of the real value.
Looking at the place you live only as an investment may be what got you here. Remember you stil have to live someplace were not turtles unfortunately. Slow your investment time table and strech it out over a little longer plan. You have to do this for any investment plan and housing is no differant. You know what ever comes down must go up but not at the same speed or as far. |
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hurtlocker2010
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Keep it and use a HELOC to quickly build your equity. This technique is sometimes called a LEAP Program.
The LEAP Program works like this: As you are setting up your mortgage, you should also be looking for a Home Equity Line of Credit (HELOC) either with that bank or with a second bank. You will want to tie a checking and/or a savings account into the HELOC and you should have direct deposit from your employer to properly take advantage of Leap™.
There are several advantages to making your mortgage payments through a HELOC:
Your paycheck will pay down your line of credit. Once the HELOC is set up, you will want to use a portion of the line to pay down your mortgage. Say you are eligible for a $20,000 line; you would take $4,000 to $6,000 to pay down your mortgage. Then, you set up your accounts so that each paycheck is used to reduce your HELOC line.
You save interest each time you get paid. Your monthly interest payment on the HELOC is based on your average daily balance. Therefore your paycheck reduces your daily balance thus lowering your interest expense. You can pay your other bills using a HELOC but you want to pay them at the last possible moment to keep the daily balance as low as possible.
With your money in a HELOC it is now working for you. With savings rates so low these days, you can transfer the money from your savings into your HELOC to keep the daily balance low. That way it earns more money for you.
You are building equity faster in your home, reducing long term interest payments without changing your current lifestyle. You continue to earn money, pay your bills and live your life. As long as you are earning more money than you spend each month you are saving. If you receive a bonus or work a lot of over time you can reduce your HELOC line. Once that it paid off, you take another $4,000 to $6,000 to pay down your mortgage balance, again reducing the time it takes to pay off our mortgage. You control when you make the lump sum payments, but it is to your advantage to make them whenever you HELOC is paid down. Best of all, you are in control and can decide how much to pay down.
You continue to make your existing monthly mortgage payments. The lump sum payment does not replace your monthly payments. Continue to pay them on time. The difference is that more of your monthly payment is going towards principal than without the Leap program. Watch your monthly mortgage payments and you will quickly see that you are building equity and you will see that your interest payment amounts are dropping. |
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MarketStock
 |
sell it at appraisal pay the difference and don't buy houses that will have such a devaluation |
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mou
|
See if you could pay a lower mortgage for a longer period of time. |
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Expert Realtor
|
I am very curious as to where you bought where it decreased that much. I have heard of some nosedives, but unless they built a nuclear power plant or a graveyard next door, I find it hard to believe it fell by that much.
Houses are like stocks...you don't lose anything until you sell.
Get an appraiser to get the value for you...don't do it yourself. I had someone call me in a panic a month ago wanting to sell their house because they said their $250K home was now worth only $90K...you know where they got that figure from? Because the house next door to them sold for the loan payoff to a family member...that DOES NOT have an impact on value...appraisers look for these types of transactions and don't use them for comps.
You have to know these things before you can make that decision...an appraiser will do it without a report for probably around $100...if they have to do pictures and a report is when you pay the full fee.
However, if you want to do this (and I don't recommend it...b/c it will be a minimum of 5 years before a bank will give you another loan on a house), do a Deed in Lieu.....the downside is that they probably won't agree to a $150K loss and if they can't sell it for pay off at a foreclosure sale, they will come after you for the deficiency judgment. |
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