You tax savings are over $800/mo The only true way to calculate them is to do your own taxes and use the same numbers from your return, backing out the mortgage in a second scenario. You bought mid 2007 so you have never had a full year with mortgage tax savings, this february is the first time you will have a full year and be able run both scenarios.
Your interest rates don’t actually suck, libor spreads are getting worse and should stay there through the recession, 6.75 was todays’s average 30 year fixed with 20% down.
Another thing, it isn’t going to take ten years to return to your price, you didn’t buy at peak, you bought too early but you bought a year or two into the decline about 25% off peak. In nominal terms it should take just a few years for you to get back above water since inflation is how they are going to save the market ultimately, it will take a couple of years but inflation will come, too much money is being printed right now. Inflation may also affect rents in that ten years. It’s a bet either way, but right now you have a recession proof job and a mortgage that can’t go up and it’s less than 28% of your income. The only thing driving you is your equity but you said it isn’t an investment, it is a place to live, so treat it like one. Hunker down, if it gets too much worse, buy a rental and reduce your base through dollar cost averaging.
Lastly, your house isn’t worth 180k, more like 250-275k, don’t exaggerate the numbers to talk yourself into something, works both ways, you talked yourself into buying and now you are talking yourself into walking. Doubtful you can sell short, you can’t show hardship and doubtful you’ll get much relief from in a workout for the same reasons. The reality is that you can afford it, you just want something extra, they are keen to that play, just like they are about the buy a second home and plan to rent then walk from first, it can be done but they are watching for it. Be wary of seeing the comps without seeing the actual deal, there are a lot of listings that are priced very low to get multiple bids, I’ve been one of the bidders three times this month alone, standing there with cash in hand, willing to pay full price and getting shut out by 3, 4, and even 8 others who made offers within 3 hours of the sign going up. It primarily happens in the premium areas, which harveston is one of. Another reason to keep paying and wait, you have no idea what the recent events will end up once the rubber hits the road, who knows what tax advantages or save the homeowner programs will show up in the next six months, you already spilled the milk, hang out and see what free towels they start giving out.
I’ll say it again, I doubt this or any other advice will resonate because your wife wants a bigger place and in the end the numbers will crunch into what she wants.
