Posted on 06/26/2014 6:47:21 AM PDT by george76
The bold part above is what differentiates you from the overwhelming majority of folks that I'm aware of that either just stopped paying and lived "free" in their homes until the bank foreclosed on the house (in some cases up to 3 years later) or just gave up and walked away. It's a credit to you that you did your best to live up to your obligations rather than do what so many others did. Best of luck to you going forward.
I don’t need to refinance, I need to sell, we are moving. I was hoping to stay where I was for a few more years but I need to relocate for work.
My theoretical decrease in home value is going to become a reality.
We’ve been paying extra on our loan every month for the last 10 years and our balance is about half of what we paid, unfortunately, the value of the house is down too. Were not underwater but we are walking away from a lot of money.
“Wealth” and “net worth” are roughly synonymous, or so they told me in my business-school days. The excess of assets over liabilities. In terms of your house specifically, that’s called “equity,” but over your whole set of assets and liabilities, it’s “wealth.”
Exactly. The medial house value in the US is something like $250K. The values of homes can fluctuate somewhere around 10% per year... that's $25K. If the medial household "wealth" is $50K or so, then changes in home values are very significant.
Personally, I think a better measure of our financial well-being would be some combination of income, savings (cash or other near-liquid assets) and debt. I'm not sure what the best formula for that is though.
Someone needs to calculate the drag effect of federal, state and local regulations on American wealth. There’s all kinds of laws that benefit a minority of cronies at the expense of all of us.
If you are applying for any kind of real-estate loan, the application requires that you list all assets and liabilities. The value of real estate owned is an asset, the mortgage balance is a liability.
When I want to raise money for any purpose, real estate or other, either a re-finance or a second mortgage (called a home equity loan these days) is the lowest interest available, and is the preferred method for most smaller investors.
As I stated, a lowering of equity negatively impacts my ability to get credit. I don't believe I ever said it impacts my credit report, which I agree, it doesn't.
Do not confuse "credit report" with the ability to get credit. If income is $50k, no matter how good your credit report, no one will loan $500k, unless you have substantial assets.
Sorry, I just re-read my original post, and I did say “credit report”. My mistake, I should have said loan application, or credit application.
That's what I was wondering about. Median household net worth is already insanely low in the US. If the "wealth" in a house were more realistically computed as the difference between what profit ones current house would bring minus the cost of replacement housing, that would be meaningful wealth. And the median "wealth" would be even lower.
It's hard to imagine a scenerio where anyone except the top 25% (or so) of the population can keep up the illusion of a comfortable middle class life.
From what I read, for the majority of people, their house is the main source of “net worth.” Employer retirement savings might be the only other “wealth” they had. When house prices fell, that was, over all, a large decline.
I understand what you are saying; I got married making a low salary, and a few years later started having children (which reduced our income drastically). It is tough, but I know that if we didn’t do it like that we would just be paying for other people’s children instead (through higher taxes).
May God guide your decisions going forward, and look after you both.
“From what I read, for the majority of people, their house is the main source of “net worth.” Employer retirement savings might be the only other “wealth” they had. When house prices fell, that was, over all, a large decline.”
Imagine the people under 30 who have no savings and no house, coupled with low salaries...
No, I just have to remember. BUT, not to overlook the fix those people are in, they wouldn't figure into "loss of wealth" statistics.
“BUT, not to overlook the fix those people are in, they wouldn’t figure into “loss of wealth” statistics.”
That’s true; they won’t miss what they never had. There will be rumblings as long as there are people around who remember the “before-times”...
Must have been your fingers thinking on their own(happens to me enough). In any event - I 100% agree with your follow-up.
I don't have anything beyond a 1st mortgage on my house and while the additional means of raising money you stated make financial sense, putting my house on the line fills me with terror. I re-fi'd a 30 year down to 15 (should've just taken the 15 years to begin with but oh well) getting a lower interest rate, shortening my overall length by 2 or 3 years and decreasing my mortgage payment. I skim zillow and get daily emails from them and so many people re-fi'd to take money out and lost their homes as a result.
Everything old is new again. Equal poverty for most, and if you’re into schadenfreude, the better-than-you’s will catch preventable diseases from their third-world household help because they’re too “green” to get vaccinated.
Someone on a thread yesterday, I think, was asking, “What do we need economic growth for?” I didn’t have time to say, “Because I don’t want the standard of living my grandparents had. I want air conditioning. I want more than one bathroom for 12 people. I want two cars (well, currently 4, but they don’t all run all the time.) I want a computer.”
I’m not saying we should have open immigration, but one reason Mexicans and all are coming here is that “no growth” in Mexico may not bother Carlos Slim, but for the poor, it’s the same old hunger and death their grandparents had.
If you have to move to get a new job and your house has gone from $400,000 (2006) to $124,000 (2014) you might have a slight problem.
Yes, those are real numbers. The area where we are house hunting is a real eyeopener. The houses in our current area have not risen but they have not dropped either.
Well, yes. I was referring to a static situation. My neighborhood saw a modest drop in prices, 3-4 years ago, and has recovered to the previous level. We could always have sold our house for more than we owed, and probably for more than we paid, if not much more. It's a different story, of course, if you've spent your equity.
My daughter's friend in a much higher priced area is moving, and it's taking longer to sell their house than the mother expected, even after she made some improvement. This suggests the market is wobbly where the other half lives; people from Up North who might have bought her house would be more interested in ours, for half the price.
“I’m not saying we should have open immigration, but one reason Mexicans and all are coming here is that “no growth” in Mexico may not bother Carlos Slim, but for the poor, it’s the same old hunger and death their grandparents had.”
Bush II agreed to leave the border open after meeting with Vicente Fox, who warned about the consequences (not just for Mexico’s stability, but for the US along the border as well). Carlos Slim & company are just doing what England tried to do in Ireland 160 years ago; de-populate the land for their own uses.
As far as the standard of living we would like (and usually enjoyed when we were younger), right now that comes at a cost: a 0 birthrate.
Well, I have ten children, just like my great-aunt Mary Lou (who my mother wouldn’t let me be named after, thank you Mom). Miz Mary Lou had four bedrooms, same as us, but I have 2-1/2 bathrooms and air conditioning. We could have a bigger house and a lot more stuff if we didn’t have all the children, but how would that help?
There’s no $100,000 sports car that would make me as happy as my father’s 1984 Mazda RX-7, even if it doesn’t always start.
Homes are still appreciating here in L.A. Going up and still selling briskly.
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