If I choose to believe a chocolate cake is worth 1 million dollars, whose fault is it? The one selling it to me? Or mine?…
Great analogy, marion. And if the bank had loaned you the million dollars, would it be their fault? No.
sandiego’s predicament is exactly why the fundamentals that I’ve learned from Rich and all the Piggington posters should be taught to high school seniors.
From his/her posts it appears the condo was purchased for $750K with $100K down. At 5.75 fixed the mortgage is probably around $3500, prop tax $750, HOA at least $300, opportunity cost on the $100K down at least $400 per month. Assuming the highest tax bracket, tax savings of approx $950 per month, so monthly expense minimum $4000.
If you could rent this condo for anywhere near that, then it’s not such a bad deal, whatever selling prices of nearby condos are going for.
However, if you could have rented this for a lot less, and had been aware of real estate fundamentals, you would have thought twice before buying.
Another mistake is not getting 30 year fixed. I’m sure you assumed that when the time came you could refinance, but people need to be aware that there is always a risk involved in not locking in for the entire term. A lesson you’ve learned the hard way.
