Homeowners: Is your mortgage upside down?
Just heard on the local Orlando news: 54% of those who have mortgages on their homes owe more than their house is worth. They are 'upside-down.' That astounded me! I knew it was bad here, had no idea it was so terrible.
In Florida, the statewide percentage is 46. Nationwide 31%. Doesn't look like the situation will get better anytime soon. I'm predicting another 3-4 years before the housing market stabilizes. And property values will never reach the over-inflated values they were 5 years ago.
I know of a young family that simply walked away from their home. So far unside down, they couldn't find a way out. Refinancing would not have helped. So sad for those in this situation - not all buyers are to blame for over-extending.
Anyone here in that situation? Or know someone who is?
It is just as bad in our area (Northern California). We are one of the lucky ones, we aren't upside down. But I know too many people who are....
Prices here in the Dallas area have been pretty stable, at least for reasonably sized homes.
I'm about a year away from paying mine off.
I live in Northern California, too (SF Bay Area/Peninsula area), and although my property value has dropped ~22% from my purchase price in 2009, my mortgage is still less than 50% of neighborhood property values.
Despite the drop, my wife and I had enough equity in our home to refinance, and we lowered our property taxes by requesting a property reassessment.
Our neighborhood has been hit (not hard, but enough) by bank REO sales.
I consider myself lucky.
I'm another DFW resident and thankful that housing prices have remained mostly steady in the area. I think my assessment has fluctuated less than 5% in the last about eight years. So, no, I'm not underwater. If things continue, I'll pay off my (30 year) mortgage in around 17 years from when I took out the loan.
I better not be underwater. Our house is 16 months old. :(
No, but that really can't be determined until you try to sell. The market drives the value of your house and upside down or not is determined by how much of that you owe.
Fortunately, I was able to buy after the market went down. I'd say I'm ahead in the game.
@mtm2: I think you're probably correct. Though, it's my understanding that you are considered 'upside down' if your house is valued on the local tax rolls for less than you have outstanding on your mortgage.
If you're not selling your home, then you don't need to be concerned about it now. The problem, as I see it, is for those who paid a premium inflated price for their home 5 or 6 years ago. Those homes have lost countless thousands* in value...and I don't think it will ever go up to the price they paid for the house. IOW Their house will never be worth what they paid for it. I am speaking specifically about the area where I live.
*I know of a house in my neighborhood that has dropped over 1 million in value. O-o They are really upside down. Unless, of course, they paid cash. Still, they will never get what they paid for it. :-/
I'm good, was fortunate enough to have built my home 15 years ago when I was pretty young and now only have a few more years and it will be paid off.
Things seem to be looking up in our area (PA/MD). A new development was built about 6-7 years ago, has about 20 houses in it, and last year a quick drive through showed what seemed like 1/2 of them for sale or empty. They are all full again and building started in another development close by. Just drove thru the other day and what lots have not already been built on have sold signs on them.
Bought Nov '07 about 25% under water
I closed at the end of January and the housing market is rebounding here in Tucson since that time so I would say I got in at the very bottom of our market. At least it appears that way right now. I also got a 2.99% interest rate so I'm feeling pretty good about it. I feel for those that bought at the top of the market though.
So here's the whole story:
1. The house was purchased at a discount. I must pay more insurance than I paid for the house because they say it will cost $80,000 more to rebuild than what I paid for it.
2. The current appraised value for the house is about 60,000 below what I paid. So I've lost a significant amount of value.
3. I am not upside down on the mortgage but only because I have already paid off a little more than 60,000. Had I only paid the minimum payments, I'd be way under water.
4. I have the house rented out at this point and hope the tenants stay there for several more years.
5. If I can keep the house rented, I expect it will go back up in value and I will sell it to get what I paid and hopefully break even.
Thankfully no... We bought a home that was reasonable, didn't jump into more than we can afford. I know that plenty of people found themselves in this situation without making poor decisions, but there are also a lot who shouldn't have bit off more than they could chew.
I live in MA and I bought when the market was hot. But it's a rental property that pays for itself right now. As long as that keeps up then I'll own the house outright by the time I'm ready to retire. (fingers crossed!)
I have no plans to sell it so it's not a major concern of mine. But it does suck to know that if I waited I'd have been able to purchase a similar home for about 25-30% less. It would've be making money for me today.
No, but I have very little equity for having paid on it for 5 years. I'm close enough that I might would have to pay the realtor out of my pocket.
No but only because I stuck to my budget when we were buying and didn't listen to the bank. If I had bought as much as the bank said I could buy, well-ramens and ketchup would be dinner most nights and there would not have been a second kid.
Bought into equity a month ago (first home) . Interior was dated (all cosmetic) so we got a deal.
No, we waited to buy pretty much at the bottom of the valley here in Seattle. Got a great deal and a low interest rate. With any luck this could turn out to be a good investment.
It upsets me that banks are not being more cooperative with helping people get back on top of their payments. The banks shouldn't take the full hit on most of these mortgages, the homeowners were just as irresponsible buying so far above their means but the government shouldn't have to force banks to do the right thing.
Ours WAS $150,000 upside down, and we had even put $105,000 cash down when we bought it 5 years earlier. Bought it for $455k, shortsold it for $210k 1.5 years ago. It would have taken at least a decade to have equity again, so decided to cut out losses. We now live in a bigger , nicer house and pay a LOT less, in the same neighborhood.
It was purely an economical decision. We could afford the payments, but it made NO financial sense to stay when the bank refused to renegotiate the terms of the loan. They would have lost less of they had made a deal with us, instead they lost $140k+. Screw 'em.
Wanted to thank everyone who responded to this question. For some, it must have been very difficult. I am saddened by those who are in deep financial difficulties. I've always be told that buying a home was the best investment a person could make. I'm not sure that's true today. Sad.
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