Submitted by SellingMyHome on November 20, 2009 – 12:17pm
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My story:
Bought a house in Lakeside (92040 zip) in 2003 for a little over $400,000. Since then in 2006 or so, I did a refi with about $15,000 cash out (all of which went in to fixing up the house, not for new BMW’s). So, that means we have a recourse loan. Actually got out of an 80/20 in 2005, then refi’d in 2006. Closing costs were always rolled in, so total owed got higher! Can you believe the banks do that? My house actually appraised for over $600K during my last refi!
We currently owe about $450K, can get about $350K after realtor fees. That means we are hoping for a $100K forgiveness.
Current mortgage and Property tax add up to $3,300/month. Total household income is about $120K, and I estimate we save about $900 month with the interest deductions, so would need to rent for less than $2,300 to make it work. We could easily find a place for less than that that suites our needs.
Why do we want out? Like 23109VC, we need a bigger place, and hate to see houses going so cheaply. We could easily buy a bigger and newer house for the same as we owe, or a little more. Also, a neighbor recently converted their house into a nursing home. This has upset my wife a lot! We’re not sure if it will just be the infirm elderly, or worse, halfway house type folks.
Can we afford what we have? Yes, but with two kids under four, we have saved absolutley nothing in the last four years, and have actually been dipping further into our credit cards. I have a great pension at work, and wife contributes to her 401K. Sadly though, we have no savings in case of emergency.
SO, my questions is: Is it financially smart to get out, rent, wait out the hit to the credit for the short sale, and buy in a few years? Should be able to save enough for a 10% down then. Also, will have more money each month with higher income, school loan paid off, and one less car payment. . .
SMH, From what I’m seeing here and from subsequent posts on the same thread is that, while a “homeowner,” you refied at least twice, the 2nd refi reconveying a 1st TD and also a non-purchase-money 2nd TD (ostensibly spent on property improvements only). Please correct me if I have this wrong.
I have few questions here for you … to gain a complete understanding of your then-situation …
1) What what the total amount forgiven in your (2010) “short sale?” Did you only have ONE lender at the time of closing your “short sale?”
2) Did you purchase the “shorted” property in 2003 with one mortgage only or two mortgages?
3) What was the percentage of your downpayment in 2003?
4) Was your purchase-money mtg (orig 2003 mtg) a VA, FHA or conventional mtg?
5) Was your “shorted” mtg a VA, FHA or conventional mtg?
6) How many actual times did you refi this property? Do those times include the time you took out the $15K 2nd TD which you state you used for improvements to the property?
7) What was your FICO score at the time you purchased the property you sold short?
8) Since you state your (current?) FICO score is in the “low 700’s,” what (fixed) rate and terms do you think you can expect to obtain today if you were to try to obtain another purchase-money mtg?
9) What is your current price range for a new home?
10) What type of mtg do you now hope to qualify for to purchase a property today (ie VA/FHA/Conv)?
11) What is the percentage of downpayment you now plan to use if you are able to purchase?
12) At the time you decided to “walk” on your old property, did you think that “Lakeside 92040” was somehow a bad place to raise a family or had “bad schools?” And, if so, if you planned on having kids when you bought the Lakeside property, why did you even buy there in the first place?
13) You state the house was too small. If you knew you were planning on raising a family there, then why didn’t you purchase something bigger (or use your “cash-out” equity to add more square footage)?
14) What was the lot size of the property you sold short? If over 10K sf, do you think you can now afford to purchase a property with that size lot?
15) Hypothetically, had you NEVER refied and/or took “cash out” and kept making payments and DID NOT sell short, do you think you will still be underwater today? If so, by how much?
16) Are you aware that permits for “board and care” and “group homes” of every kind are obtained by owners in EVERY part of the SD County (even areas encumbered by HOAs) and in areas of ALL price levels?
17) In hindsight, if your FICO score dropped at least 150 points by selling short, do you now think it was “worth it” to do so, given the much tougher lending standards of today?
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SMH, it just seems a little odd to me that you should have been as “underwater” as you have stated from a 2003 purchase unless . . .
-you put little to nothing down when purchasing it;
-you paid far MORE for it than the nearby “sold comps” at the time you purchased;
-you had an interest rate above 7% on your purchase-money note (and possibly subsequent notes encumbered by 1st TDs) or were paying I/O on one or more mtgs encumbering this property;
-you repeatedly refied “cash out” along the way (whether thru refi, 2nd TD or HELOC);
-you signed up for points and a lot of junk fees with each “refi”;
I understand you decided to exercise your legal right to walk away and that you are not alone.
If there is any more light you can shed on your “story,” it would be very instructive and informative for the Piggs.
