Buying again, 2 years after Short Sale – questions for you pros

[eavesdropper]

[quote=flu][quote=SellingMyHome]
It would be helpful to post a breakdown of your monthly expected expenses….Because people here could probably chime in on if you’re missing something or underestimating something….

1. Mortgage monthly =
2. Property tax/12 =
3. Insurance, Water,Electric, Garbage,Nature Gas monthly =
4. Telephone service monthly=
6. Internet service monthly=
7. Cell phone service monthly=
8. Cable TV service monthly=
9. Car payments monthly=
10 Auto insurance monthly=
11.Medical Insurance premiums/deductibles (annual)/12 =
12.Childcare expenses monthly=
13.Child doodad/spendings monthly=
14.Entertainment expenses monthly=

Add err up…![/quote]

You forgot food.

Or is the rumor true? The one that’s been circulating for years here on the east coast: that, because of exponentially rising housing costs, Californians had to give up eating. Something to do with food being an unaffordable luxury, completely incompatible with home ownership.

[Coronita]

[quote=eavesdropper][quote=flu][quote=SellingMyHome]
It would be helpful to post a breakdown of your monthly expected expenses….Because people here could probably chime in on if you’re missing something or underestimating something….

1. Mortgage monthly =
2. Property tax/12 =
3. Insurance, Water,Electric, Garbage,Nature Gas monthly =
4. Telephone service monthly=
6. Internet service monthly=
7. Cell phone service monthly=
8. Cable TV service monthly=
9. Car payments monthly=
10 Auto insurance monthly=
11.Medical Insurance premiums/deductibles (annual)/12 =
12.Childcare expenses monthly=
13.Child doodad/spendings monthly=
14.Entertainment expenses monthly=

Add err up…![/quote]

You forgot food.

Or is the rumor true? The one that’s been circulating for years here on the east coast: that, because of exponentially rising housing costs, Californians had to give up eating. Something to do with food being an unaffordable luxury, completely incompatible with home ownership.[/quote]

I’ve learned stucco tastes pretty good with San Diego tap water.

[Coronita]

[quote=bearishgurl]SMH, The parts of your story I find most troubling are your apparent inability to save much money (even when renting), why you didn’t try to sell at the peak (it was NOT 2003, btw) and why you were charged so much for refis. It leads one to believe that your credit wasn’t so good from the get go (even though it may have been). Also, I truly believe you may have paid too much when you first bought the property, considering it was on a smallish lot for that area. I haven’t actually researched this but wonder if the 2003 SFR sold comps in 92040 were actually closer to about $188 sf at that time.

Thanks for allowing us Piggs to peer into the mind of a “strategic defaulter.”[/quote]

Hold on there. With SMH’s latest disclosures, I don’t think he was completely accurate in saying he wasn’t able to save money…..I think his definition of savings is different in the sense he meant actually in a cash after tax savings account. His latest disclosure of contributing to a 401k/pension and 529 tells me he is saving…So perhaps he meant his actual after tax savings account is much less.

My gut feeling is this guy is a lot more savy with $$$ than we think..

I am concerned about the 3.5% downpayment…But hey, if he’s already made a budget for it and if he can squeek by and also save for retirement/kids/etc,,, I’d say by all means more power to him.Assuming this will be a fixed rate loan for 15 or 30 years, it’s free money at current interest rates..My gut feeling is rates aren’t going up anytime soon. Look at the frickin chaos on the markets…Despite what we think, I don’t think the dollar’s collapse is anywhere near close….I think folks are more freaked out the more plausible Euro collapse……

[eavesdropper]

[quote=SellingMyHome]So, more questions about rent vs buy.

See the calculator on:
http://www.washingtonpost.com/real-estate/tools-calculators/rent-or-buy-home/process.html#results

What should I put for:

Rent: Annual rate increases (%)

Home:
Annual appreciation rate (%)

Other:
Before tax return on savings (%)
Assumed annual inflation rate (%)

****

Big differences on outcome if I change the rent increase from 1% to 3%.

What are the realistic expectations for the above four rates? Is that a whole topic for another post?

I guess I could model the alternative scenarios and see which ones I like, then use that. Just kidding, that is what happens in government projections….[/quote]

What do you mean, “just kidding”? That’s exactly what you should be doing: modeling a variety of scenarios. Given the fact that (1) you’ve been through a default, strategic or otherwise, and (2) you have two young children, you should be doing your damndest to come up with a worst-case scenario now so that you’re not caught unaware in the future when/if it comes to pass. Unfortunately, if you are entirely comfortable with “strategic default” as a financial management tool, it is not among your capabilities to create a worst-case scenario.

This time around, you need to take “strategic default” out of the solutions set for the house-buying equation. Would you and your wife be as enthused about buying again if your experience had been one of fear and helplessness and public humiliation? And I’m not speaking simply of your emotions or your wife’s, but that of your children. If you asked any of the millions of young parents out there, who have been directly affected by foreclosure, to name the single-worst aspect of the experience, 10 to 1 they’ll talk about their kids. The shame of not being able to keep a roof over their heads, looking at their faces when you can’t answer the question, “Where will we live?” The pain of telling them that they’d have to leave almost all their belongings behind, or that their dog or cat has to go to the pound. How impotent they felt when their own fear left them incapable of easing the fears of their kids. The look in their child’s eyes when they were standing in a front yard filled with their belongings, watching the sheriff change the locks on the door.

Believe me, I’m glad that you and your family didn’t have to go through this experience. But make sure that you include that scenario in any that you model, and be sure to give it priority in your decision-making process, because you’re at significantly increased risk for it to become a real-life situation.

If a difference in rent increase from 1% to 3% gives you pause, I’m strongly advising you to step away from the table. In fact, if your landlord limits rent increases to these amounts, I’d try to sign a 20-year lease with him. IAs for what numbers to plug in the other areas, here’s what I suggest: Figure out what you’re able to comfortably pay for housing on a monthly basis, and add in all your other expenses, plus a $500.00 per month savings contribution (aside from retirement or kids’ college). Figure out first if you can cover all of that comfortably. If you can’t, it’s not time to buy (duh!). However, I’m assuming that you can based on what you’re telling us.

Now start plugging numbers into those categories you mention. As soon as you start cutting into the $500 savings contribution, you’ve reached your limit. $500 in your situation is a very small amount of savings, and well below what you should be contributing regularly based on history. If you cannot even manage that on a regular basis, you need to back away from buying, or reduce your price range.

I noticed that one of the categories on the worksheet is “House appreciation rate”. You, of course, realize that it is entirely possible that whatever home you buy will not increase in value at all, or it could drop quite a bit further in value. And in a case like that, I can guarantee that, when value start to rise again, they will do so at a much slower rate than many people anticipate. Again, the early 2000s were a fluke, and the dramatic upswings in that market are the reason for the dropping values now, and for rising inflation and other fun stuff. I’ll ask a question again that was posed by someone else earlier: If you knew the price of the house would drop by 20% in the first several years of ownership, would you still buy?

I sense that you feel like you and your wife earn very good salaries and that you have layoff-proof jobs. Yes, your income is good, but the costs associated with ownership of a $400,000 to $500,000 house will burn a lot of that quite easily. And here’s something you need to know and accept fully: no one’s job is 100% safe these days. Government employees are not safe from layoffs. At some point, public pressure will cause weak-spined politicians to do the previously-unthinkable: cut funding for government jobs. As for your wife, lot of people are rushing into nursing and healthcare because they think it’s recession-proof. The truth is that those in the healthcare field will be handling more responsibilities and working even longer hours at reduced pay in short-staffed situations. Somebody has to pay for all that health care in a recession. With rapidly rising unemployment, there are far fewer consumers for that healthcare because of loss of job-related health benefits. I sincerely hope that neither of you ever is faced with unemployment, but you cannot assume that it CAN’T happen. The unemployment rolls are filled with people who thought the same thing.

I have to comment that you’ve been a really good correspondent through this whole thing. Despite the potential for inflammatory reactions, you asked your question, and you’ve taken what everyone has had to dish out in response. You’ve remained polite and responsive throughout, and I’m quite impressed. I may not agree with all your opinions and actions, but I believe in giving credit where it’s due. And your mama raised you right!!

Best of luck in whatever course you choose.

[SellingMyHome]

I was kidding about just picking the one that looks the best, but maybe not realistic. I could put in that rents rise 10% while savings only increase 1%. Of course buying will look best then (using the rent/buy calculator website).

I hear you about really plugging in the scenarios this time, and no, strategic default is not an option again, wife wouldn’t have it.

Would I buy again if I knew prices would drop 20%? Hell no , but no one would if they truly knew that ahead of time. Am I willing to live through price drops next time around? Possibly, this should be our house for the next two decades…

Thanks for the kudos and well wishes, I dont expect anyone to agree with what I’ve done in the past. I just want to find answers to questions I didn’t even know to ask 8 years ago.

I really appreciate the thought and time and effort a few of you have put in responding to me, I’m really impressed.

[bearishgurl]

I want to backtrack here for a minute because I think SMH’s situation may not have been that “dire.” I will use a “June 2003” buying month for illustrative purposes only. That “era” was nowhere near the height of the RE “bubble.”

[quote=SellingMyHome] . . . There was no reason to leave that house except it was no longer the house we wanted, and felt a bit screwed that it wasn’t worth the money we owed (even from the purchase price). . .

I had hoped for modest price increases, enough to move-up in about 10 years. I never thought, nor still do, that housing should be a money maker . . .

I do prefer those that at least try to pretend they aren’t judging me without knowing my whole story.[/quote]

SMH, my post was not designed to “know your whole story” or “judge you” (hence, I didn’t ask for any information regarding specific amounts of “cash out” taken).

It was to get into the mind of a “strategic defaulter.” Believe it or not, there have been thousands of NOD’s filed in this county in the last three years in which the defaulted amounts and late fees/charges still continue to grow month by month AND in which the defaulted-upon lender has never filed an NOS on. Presumably, the defaulting trustor (or their “paying” tenant”) still resides in these properties. In a few of these cases, I am personally aware that the defaulting trustor still lives in the property and has always been gainfully employed. In other words, nothing has changed in their circumstances to warrant stopping payment on their mortgages except that they felt they were “underwater,” saw others (with obviously better credit than they) recently buy “bigger, `better’ houses for less $$ or consciously decided they would try to ride the “free” foreclosure gravy train as long as possible (until after their property changed hands or reverted to the beneficiary at the time of trustee’s sale).

Of course, we all understand here that nothing is “free.” You pay for these decisions with a big hit to your credit report. And SMH DID. If his credit is currently in the “low 700’s,” he has not yet recovered enough to obtain a “prime” conventional loan.

SMH, let’s just suppose you never refied and just kept the property for ten years, as you intended. You stated you planned on having kids in five years, so you DID plan on starting a family while living there. Ten years from 2003 is 2013. Who’s to say our local market wouldn’t recover significantly by 2013 or 2014? A LOT of things can happen in the next year and I think it’s going to be a wild ride :=]

$400K purchase price in 2003 (assuming credit score =>740 at the time and $0 downpayment):

$320K conv first TD at approx 5.75% fixed for 30 yrs (or 30 due in 7) = $1868.80 mo P & I.

$80K purchase-money private 2nd TD (yes, even if also serviced by a “legit” lender, it was immediately shlepped off on some poor chump at a discount) at approx 7.5% 30 yr fixed due in 10 years (balloon) = $559.20 mo P&I.

$1868.80 1st TD P&I
$ 559.20 2nd TD P&I

$2428.00 Total P&I
$ 54.50 of $654 homeowner policy annual premium
$ 390.00 1st yr monthly property tax ($4680 yr)

$2872.50 Total PITI (1st yr of ownership)

Let’s look at the amortization on the 1st TD:

Amortization table for $320,000.00 (1st pymt 8/1/03)

Month / Year Payment Principal
Paid Interest
Paid Total
Interest Balance
Sept. 2003 $1,867.43 $334.10 $1,533.33 $1,533.33 $319,665.90
Oct. 2003 $1,867.43 $335.70 $1,531.73 $3,065.07 $319,330.20
Nov. 2003 $1,867.43 $337.31 $1,530.12 $4,595.19 $318,992.89
Dec. 2003 $1,867.43 $338.93 $1,528.51 $6,123.70 $318,653.96
Jan. 2004 $1,867.43 $340.55 $1,526.88 $7,650.58 $318,313.42
Feb. 2004 $1,867.43 $342.18 $1,525.25 $9,175.83 $317,971.23
Mar. 2004 $1,867.43 $343.82 $1,523.61 $10,699.44 $317,627.41
April 2004 $1,867.43 $345.47 $1,521.96 $12,221.41 $317,281.94
May 2004 $1,867.43 $347.12 $1,520.31 $13,741.72 $316,934.82
June 2004 $1,867.43 $348.79 $1,518.65 $15,260.36 $316,586.03
July 2004 $1,867.43 $350.46 $1,516.97 $16,777.34 $316,235.57
Aug. 2004 $1,867.43 $352.14 $1,515.30 $18,292.63 $315,883.44
Sept. 2004 $1,867.43 $353.83 $1,513.61 $19,806.24 $315,529.61
Oct. 2004 $1,867.43 $355.52 $1,511.91 $21,318.16 $315,174.09
Nov. 2004 $1,867.43 $357.22 $1,510.21 $22,828.37 $314,816.87
Dec. 2004 $1,867.43 $358.94 $1,508.50 $24,336.86 $314,457.93
Jan. 2005 $1,867.43 $360.66 $1,506.78 $25,843.64 $314,097.28
Feb. 2005 $1,867.43 $362.38 $1,505.05 $27,348.69 $313,734.89
Mar. 2005 $1,867.43 $364.12 $1,503.31 $28,852.00 $313,370.77
April 2005 $1,867.43 $365.86 $1,501.57 $30,353.57 $313,004.91
May 2005 $1,867.43 $367.62 $1,499.82 $31,853.39 $312,637.29
June 2005 $1,867.43 $369.38 $1,498.05 $33,351.44 $312,267.91
July 2005 $1,867.43 $371.15 $1,496.28 $34,847.72 $311,896.76
Aug. 2005 $1,867.43 $372.93 $1,494.51 $36,342.23 $311,523.83
Sept. 2005 $1,867.43 $374.71 $1,492.72 $37,834.95 $311,149.12
Oct. 2005 $1,867.43 $376.51 $1,490.92 $39,325.87 $310,772.61
Nov. 2005 $1,867.43 $378.31 $1,489.12 $40,814.99 $310,394.29
Dec. 2005 $1,867.43 $380.13 $1,487.31 $42,302.29 $310,014.17
Jan. 2006 $1,867.43 $381.95 $1,485.48 $43,787.78 $309,632.22
Feb. 2006 $1,867.43 $383.78 $1,483.65 $45,271.43 $309,248.44
Mar. 2006 $1,867.43 $385.62 $1,481.82 $46,753.25 $308,862.82
April 2006 $1,867.43 $387.47 $1,479.97 $48,233.22 $308,475.36
May 2006 $1,867.43 $389.32 $1,478.11 $49,711.33 $308,086.03
June 2006 $1,867.43 $391.19 $1,476.25 $51,187.57 $307,694.85
July 2006 $1,867.43 $393.06 $1,474.37 $52,661.94 $307,301.78
Aug. 2006 $1,867.43 $394.95 $1,472.49 $54,134.43 $306,906.84
Sept. 2006 $1,867.43 $396.84 $1,470.60 $55,605.03 $306,510.00
Oct. 2006 $1,867.43 $398.74 $1,468.69 $57,073.72 $306,111.26
Nov. 2006 $1,867.43 $400.65 $1,466.78 $58,540.50 $305,710.61
Dec. 2006 $1,867.43 $402.57 $1,464.86 $60,005.37 $305,308.04
Jan. 2007 $1,867.43 $404.50 $1,462.93 $61,468.30 $304,903.54
Feb. 2007 $1,867.43 $406.44 $1,461.00 $62,929.30 $304,497.11
Mar. 2007 $1,867.43 $408.38 $1,459.05 $64,388.35 $304,088.72
April 2007 $1,867.43 $410.34 $1,457.09 $65,845.44 $303,678.38
May 2007 $1,867.43 $412.31 $1,455.13 $67,300.56 $303,266.07
June 2007 $1,867.43 $414.28 $1,453.15 $68,753.71 $302,851.79
July 2007 $1,867.43 $416.27 $1,451.16 $70,204.88 $302,435.52
Aug. 2007 $1,867.43 $418.26 $1,449.17 $71,654.05 $302,017.26
Sept. 2007 $1,867.43 $420.27 $1,447.17 $73,101.22 $301,596.99
Oct. 2007 $1,867.43 $422.28 $1,445.15 $74,546.37 $301,174.71
Nov. 2007 $1,867.43 $424.30 $1,443.13 $75,989.50 $300,750.41
Dec. 2007 $1,867.43 $426.34 $1,441.10 $77,430.59 $300,324.07
Jan. 2008 $1,867.43 $428.38 $1,439.05 $78,869.64 $299,895.69
Feb. 2008 $1,867.43 $430.43 $1,437.00 $80,306.65 $299,465.26
Mar. 2008 $1,867.43 $432.50 $1,434.94 $81,741.58 $299,032.76
April 2008 $1,867.43 $434.57 $1,432.87 $83,174.45 $298,598.19
May 2008 $1,867.43 $436.65 $1,430.78 $84,605.23 $298,161.54
June 2008 $1,867.43 $438.74 $1,428.69 $86,033.92 $297,722.80
July 2008 $1,867.43 $440.84 $1,426.59 $87,460.51 $297,281.95
Aug. 2008 $1,867.43 $442.96 $1,424.48 $88,884.99 $296,839.00
Sept. 2008 $1,867.43 $445.08 $1,422.35 $90,307.34 $296,393.92
Oct. 2008 $1,867.43 $447.21 $1,420.22 $91,727.56 $295,946.71
Nov. 2008 $1,867.43 $449.36 $1,418.08 $93,145.64 $295,497.35
Dec. 2008 $1,867.43 $451.51 $1,415.92 $94,561.56 $295,045.84
Jan. 2009 $1,867.43 $453.67 $1,413.76 $95,975.32 $294,592.17
Feb. 2009 $1,867.43 $455.85 $1,411.59 $97,386.91 $294,136.33
Mar. 2009 $1,867.43 $458.03 $1,409.40 $98,796.32 $293,678.30
April 2009 $1,867.43 $460.22 $1,407.21 $100,203.52 $293,218.07
May 2009 $1,867.43 $462.43 $1,405.00 $101,608.53 $292,755.64
June 2009 $1,867.43 $464.65 $1,402.79 $103,011.31 $292,290.99
July 2009 $1,867.43 $466.87 $1,400.56 $104,411.88 $291,824.12
Aug. 2009 $1,867.43 $469.11 $1,398.32 $105,810.20 $291,355.01
Sept. 2009 $1,867.43 $471.36 $1,396.08 $107,206.28 $290,883.66
Oct. 2009 $1,867.43 $473.62 $1,393.82 $108,600.09 $290,410.04
Nov. 2009 $1,867.43 $475.89 $1,391.55 $109,991.64 $289,934.16
Dec. 2009 $1,867.43 $478.17 $1,389.27 $111,380.91 $289,455.99
Jan. 2010 $1,867.43 $480.46 $1,386.98 $112,767.89 $288,975.53
Feb. 2010 $1,867.43 $482.76 $1,384.67 $114,152.56 $288,492.78
Mar. 2010 $1,867.43 $485.07 $1,382.36 $115,534.92 $288,007.70
April 2010 $1,867.43 $487.40 $1,380.04 $116,914.96 $287,520.31
May 2010 $1,867.43 $489.73 $1,377.70 $118,292.66 $287,030.58
June 2010 $1,867.43 $492.08 $1,375.35 $119,668.01 $286,538.50
July 2010 $1,867.43 $494.44 $1,373.00 $121,041.01 $286,044.06
Aug. 2010 $1,867.43 $496.81 $1,370.63 $122,411.64 $285,547.26
Sept. 2010 $1,867.43 $499.19 $1,368.25 $123,779.89 $285,048.07
Oct. 2010 $1,867.43 $501.58 $1,365.86 $125,145.74 $284,546.49
Nov. 2010 $1,867.43 $503.98 $1,363.45 $126,509.19 $284,042.51
Dec. 2010 $1,867.43 $506.40 $1,361.04 $127,870.23 $283,536.11
Jan. 2011 $1,867.43 $508.82 $1,358.61 $129,228.84 $283,027.29
Feb. 2011 $1,867.43 $511.26 $1,356.17 $130,585.01 $282,516.03
Mar. 2011 $1,867.43 $513.71 $1,353.72 $131,938.74 $282,002.32
April 2011 $1,867.43 $516.17 $1,351.26 $133,290.00 $281,486.15
May 2011 $1,867.43 $518.65 $1,348.79 $134,638.79 $280,967.50
June 2011 $1,867.43 $521.13 $1,346.30 $135,985.09 $280,446.37
July 2011 $1,867.43 $523.63 $1,343.81 $137,328.89 $279,922.75
Aug. 2011 $1,867.43 $526.14 $1,341.30 $138,670.19 $279,396.61
Sept. 2011 $1,867.43 $528.66 $1,338.78 $140,008.97 $278,867.95
Oct. 2011 $1,867.43 $531.19 $1,336.24 $141,345.21 $278,336.76
Nov. 2011 $1,867.43 $533.74 $1,333.70 $142,678.90 $277,803.02

Now the amortization on the 2nd TD:

Amortization table for $80,000.00 (1st pymt 8/1/03

Month / Year Payment Principal
Paid Interest
Paid Total
Interest Balance
Sept. 2003 $559.37 $59.37 $500.00 $500.00 $79,940.63
Oct. 2003 $559.37 $59.74 $499.63 $999.63 $79,880.89
Nov. 2003 $559.37 $60.12 $499.26 $1,498.88 $79,820.77
Dec. 2003 $559.37 $60.49 $498.88 $1,997.76 $79,760.28
Jan. 2004 $559.37 $60.87 $498.50 $2,496.27 $79,699.41
Feb. 2004 $559.37 $61.25 $498.12 $2,994.39 $79,638.16
Mar. 2004 $559.37 $61.63 $497.74 $3,492.13 $79,576.52
April 2004 $559.37 $62.02 $497.35 $3,989.48 $79,514.51
May 2004 $559.37 $62.41 $496.97 $4,486.44 $79,452.10
June 2004 $559.37 $62.80 $496.58 $4,983.02 $79,389.30
July 2004 $559.37 $63.19 $496.18 $5,479.20 $79,326.12
Aug. 2004 $559.37 $63.58 $495.79 $5,974.99 $79,262.53
Sept. 2004 $559.37 $63.98 $495.39 $6,470.38 $79,198.55
Oct. 2004 $559.37 $64.38 $494.99 $6,965.37 $79,134.17
Nov. 2004 $559.37 $64.78 $494.59 $7,459.96 $79,069.39
Dec. 2004 $559.37 $65.19 $494.18 $7,954.15 $79,004.20
Jan. 2005 $559.37 $65.60 $493.78 $8,447.92 $78,938.60
Feb. 2005 $559.37 $66.01 $493.37 $8,941.29 $78,872.60
Mar. 2005 $559.37 $66.42 $492.95 $9,434.24 $78,806.18
April 2005 $559.37 $66.83 $492.54 $9,926.78 $78,739.35
May 2005 $559.37 $67.25 $492.12 $10,418.90 $78,672.10
June 2005 $559.37 $67.67 $491.70 $10,910.60 $78,604.43
July 2005 $559.37 $68.09 $491.28 $11,401.88 $78,536.33
Aug. 2005 $559.37 $68.52 $490.85 $11,892.73 $78,467.81
Sept. 2005 $559.37 $68.95 $490.42 $12,383.16 $78,398.87
Oct. 2005 $559.37 $69.38 $489.99 $12,873.15 $78,329.49
Nov. 2005 $559.37 $69.81 $489.56 $13,362.71 $78,259.67
Dec. 2005 $559.37 $70.25 $489.12 $13,851.83 $78,189.43
Jan. 2006 $559.37 $70.69 $488.68 $14,340.51 $78,118.74
Feb. 2006 $559.37 $71.13 $488.24 $14,828.76 $78,047.61
Mar. 2006 $559.37 $71.57 $487.80 $15,316.55 $77,976.03
April 2006 $559.37 $72.02 $487.35 $15,803.90 $77,904.01
May 2006 $559.37 $72.47 $486.90 $16,290.80 $77,831.54
June 2006 $559.37 $72.92 $486.45 $16,777.25 $77,758.62
July 2006 $559.37 $73.38 $485.99 $17,263.24 $77,685.24
Aug. 2006 $559.37 $73.84 $485.53 $17,748.78 $77,611.40
Sept. 2006 $559.37 $74.30 $485.07 $18,233.85 $77,537.10
Oct. 2006 $559.37 $74.76 $484.61 $18,718.45 $77,462.33
Nov. 2006 $559.37 $75.23 $484.14 $19,202.59 $77,387.10
Dec. 2006 $559.37 $75.70 $483.67 $19,686.26 $77,311.40
Jan. 2007 $559.37 $76.18 $483.20 $20,169.46 $77,235.22
Feb. 2007 $559.37 $76.65 $482.72 $20,652.18 $77,158.57
Mar. 2007 $559.37 $77.13 $482.24 $21,134.42 $77,081.44
April 2007 $559.37 $77.61 $481.76 $21,616.18 $77,003.83
May 2007 $559.37 $78.10 $481.27 $22,097.45 $76,925.73
June 2007 $559.37 $78.59 $480.79 $22,578.24 $76,847.15
July 2007 $559.37 $79.08 $480.29 $23,058.53 $76,768.07
Aug. 2007 $559.37 $79.57 $479.80 $23,538.33 $76,688.50
Sept. 2007 $559.37 $80.07 $479.30 $24,017.64 $76,608.43
Oct. 2007 $559.37 $80.57 $478.80 $24,496.44 $76,527.86
Nov. 2007 $559.37 $81.07 $478.30 $24,974.74 $76,446.79
Dec. 2007 $559.37 $81.58 $477.79 $25,452.53 $76,365.21
Jan. 2008 $559.37 $82.09 $477.28 $25,929.81 $76,283.12
Feb. 2008 $559.37 $82.60 $476.77 $26,406.58 $76,200.52
Mar. 2008 $559.37 $83.12 $476.25 $26,882.84 $76,117.40
April 2008 $559.37 $83.64 $475.73 $27,358.57 $76,033.76
May 2008 $559.37 $84.16 $475.21 $27,833.78 $75,949.60
June 2008 $559.37 $84.69 $474.69 $28,308.47 $75,864.91
July 2008 $559.37 $85.22 $474.16 $28,782.62 $75,779.70
Aug. 2008 $559.37 $85.75 $473.62 $29,256.25 $75,693.95
Sept. 2008 $559.37 $86.28 $473.09 $29,729.33 $75,607.66
Oct. 2008 $559.37 $86.82 $472.55 $30,201.88 $75,520.84
Nov. 2008 $559.37 $87.37 $472.01 $30,673.89 $75,433.47
Dec. 2008 $559.37 $87.91 $471.46 $31,145.35 $75,345.56
Jan. 2009 $559.37 $88.46 $470.91 $31,616.25 $75,257.10
Feb. 2009 $559.37 $89.01 $470.36 $32,086.61 $75,168.09
Mar. 2009 $559.37 $89.57 $469.80 $32,556.41 $75,078.51
April 2009 $559.37 $90.13 $469.24 $33,025.65 $74,988.38
May 2009 $559.37 $90.69 $468.68 $33,494.33 $74,897.69
June 2009 $559.37 $91.26 $468.11 $33,962.44 $74,806.43
July 2009 $559.37 $91.83 $467.54 $34,429.98 $74,714.60
Aug. 2009 $559.37 $92.41 $466.97 $34,896.95 $74,622.19
Sept. 2009 $559.37 $92.98 $466.39 $35,363.34 $74,529.21
Oct. 2009 $559.37 $93.56 $465.81 $35,829.14 $74,435.64
Nov. 2009 $559.37 $94.15 $465.22 $36,294.37 $74,341.50
Dec. 2009 $559.37 $94.74 $464.63 $36,759.00 $74,246.76
Jan. 2010 $559.37 $95.33 $464.04 $37,223.04 $74,151.43
Feb. 2010 $559.37 $95.93 $463.45 $37,686.49 $74,055.50
Mar. 2010 $559.37 $96.52 $462.85 $38,149.34 $73,958.98
April 2010 $559.37 $97.13 $462.24 $38,611.58 $73,861.85
May 2010 $559.37 $97.74 $461.64 $39,073.22 $73,764.12
June 2010 $559.37 $98.35 $461.03 $39,534.24 $73,665.77
July 2010 $559.37 $98.96 $460.41 $39,994.65 $73,566.81
Aug. 2010 $559.37 $99.58 $459.79 $40,454.45 $73,467.23
Sept. 2010 $559.37 $100.20 $459.17 $40,913.62 $73,367.03
Oct. 2010 $559.37 $100.83 $458.54 $41,372.16 $73,266.20
Nov. 2010 $559.37 $101.46 $457.91 $41,830.07 $73,164.74
Dec. 2010 $559.37 $102.09 $457.28 $42,287.35 $73,062.65
Jan. 2011 $559.37 $102.73 $456.64 $42,744.00 $72,959.92
Feb. 2011 $559.37 $103.37 $456.00 $43,199.99 $72,856.55
Mar. 2011 $559.37 $104.02 $455.35 $43,655.35 $72,752.53
April 2011 $559.37 $104.67 $454.70 $44,110.05 $72,647.86
May 2011 $559.37 $105.32 $454.05 $44,564.10 $72,542.54
June 2011 $559.37 $105.98 $453.39 $45,017.49 $72,436.56
July 2011 $559.37 $106.64 $452.73 $45,470.22 $72,329.92
Aug. 2011 $559.37 $107.31 $452.06 $45,922.28 $72,222.61
Sept. 2011 $559.37 $107.98 $451.39 $46,373.67 $72,114.63
Oct. 2011 $559.37 $108.66 $450.72 $46,824.39 $72,005.97
Nov. 2011 $559.37 $109.33 $450.04 $47,274.43 $71,896.64

As I stated above, I used the purchase month as June 2003 for illustrative purposes only.

$277,803.02 (11/11 balance on 1st TD)
$ 71,896.64 (11/11 balance on 2nd TD)

$349,699.66 (payoff amt of 1st & 2nd TD combined)

However, if you had good credit during the period of your “homeownership,” you could have easily refied these two loans (with zero “cash out”) down to a new 15 or 30 year fixed rate loan with 0 pts and low closing costs and reduced your P&I payments up to $1000 per mo enabling you to keep the property indefinitely at a low cost and even turn it into a rental. In 2004 and 2009, mortgage rates were VERY low (for those with good credit) as they are now.

You stated that your house appraised in a 2006 refi for $600K? Why didn’t you sell then (instead of refi) if you wanted out?

Here are some recent sold comps for 92040:

1868 sf for $374K on 6K sf lot:

http://www.sdlookup.com/MLS-110040824-92040

1648 sf for $345K on 13K sf lot

http://www.sdlookup.com/MLS-110043310-13605_Julian_Ave_Lakeside_CA_92040

1708 sf for $303K on 1.45 AC

http://www.sdlookup.com/MLS-110039991-11555_Hi_Ridge_Rd_Lakeside_CA_92040

1708 sf for $360K

http://www.sdlookup.com/MLS-110053825-11210_Estival_Pl_Lakeside_CA_92040

1766 sf for $320K on 1.25 AC

http://www.sdlookup.com/MLS-110046170-11820_Hi_Ridge_Rd_Lakeside_CA_92040

1660 sf for $360K

http://www.sdlookup.com/MLS-110017106-8812_Via_Diego_Terrace_Lakeside_CA_92040

Most of the students enrolled in public schools in Lakeside seem to be doing fine:

Name of School/ 2011 API score

Riverview Elem: 853
Lakeside Farms Elem: 834
Lakeview Elem: 825
Lemon Crest Elem: 820
Lindo Park Elem: 776
Winter Gardens: 699
Tierra Del Sol Middle: 763
El Capitan HS: 738

And GOOD LUCK with your purchase of a (more expensive) purchase in Alpine using FHA. A $500K FHA purchase with 3.5% down has a $17,500 downpayment + the (now exorbitant) MMI paid both up front ($8750) and for the life of the loan ($221.14 mo).

See: http://www.approvedfha.com/fha-mortgage-insurance.html

A homeowner’s policy can be very expensive out there, as well. IMO, you should endeavor to save at least $120K while you are still renting (for a downpayment and closing costs on a $500K purchase) and go “conventional” (when you are finally able to obtain a competitive interest rate).

Alpine does not yet have its own HS (under construction to open 2013 or 2014). Guess where Alpine HS students have been bussed to all these years . . . you guessed it . . . primarily El Capitan (Lakeside) and Granite Hills High!

Name of School/ 2011 API score

Boulder Oaks Elem: 870
Alpine Elem: 861
Shadow Hills Elem: 826
MacQueen Middle: 860
Granite Hills High: 780

There is no “appreciable difference” in the performance of students taking standardized tests at *most* of the Lakeside elem/middle schools v. the Alpine schools.

What I’m trying to illustrate here is that even though you may have not yet been able to yet sell your Lakeside property for enough to pay a RE brokerage fee and closing costs, had you just stayed in the property and NOT withdrawn cash (but possibly refied the 1st & 2nd PM TD’s to 1 mtg with a much lower interest rate), you could very well have been better off today. Taxes have been going down since 2007 (adj voluntarily downwards by the assessor in 2009 and 2010).

I believe the possibility existed for you to eventually sell your Lakeside property at break-even or even a small gain by 2013-2014, so you may have screwed up your credit for nothing. Of course, your credit MAY recover enough to obtain a prime mtg by 2013-2014, but you lost the MID for all the years in the interim. Not sure how valuable that is/was to you.

As large lots go, the grass is not always greener on the other side, “figuratively” or otherwise (“windy, fire prone, hillier” Alpine v. “more sheltered, level-lot, better-located” Lakeside.

*********

SMH, I wish you the best of luck in purchasing with the FHA program in a $400K to $500K price range. Given the recent new regulations, guidelines and *exorbitant* MMI now, I don’t think it’s a very prudent way to buy a property anymore, ESPECIALLY one with a mortgage >$300K.

Just ask yourself how you’re going to be able to successfully jump thru all the hoops you will need to get your FHA lender to eliminate your (approx) $214 mo MMI in the coming years. That and your exorbitant fire ins coverage are going to get old real fast, IMHO. And this all pre-supposes you WILL NOT move into CFD/HOA out there and incur those monthly expenses as well :={

[sdrealtor]

Really? Did anyone read that? Really????

[DataAgent]

[quote=sdrealtor]Really? Did anyone read that? Really????[/quote]

No.

[hslinger]

[quote=SD Realtor]I am sorry but I do not think the poster did anything wrong besides making a stupid decision to purchase a home near the top of a bubble. That was lunacy and the seller is a poster child for why we should not have 0 down loans, or for that matter FHA loans. Forcing buyers to come up with equity (in my opinion at least 20%) would lead to a much more stable market.[/quote]I wish that 20% down was the minimum requirement for a loan but I don’t see that happening.

I don’t believe in moralizing (good v evil) financial decisions and have no problem with the OP’s actions, but for him to blame the “bank” for his purchase is just childish and ignorant. That’s 100% on him.

[SellingMyHome]

[quote=hslinger][quote=SD Realtor]I am sorry but I do not think the poster did anything wrong besides making a stupid decision to purchase a home near the top of a bubble. That was lunacy and the seller is a poster child for why we should not have 0 down loans, or for that matter FHA loans. Forcing buyers to come up with equity (in my opinion at least 20%) would lead to a much more stable market.[/quote]I wish that 20% down was the minimum requirement for a loan but I don’t see that happening.

I don’t believe in moralizing (good v evil) financial decisions and have no problem with the OP’s actions, but for him to blame the “bank” for his purchase is just childish and ignorant. That’s 100% on him.[/quote]

You’re childish and ignorant. Just kidding, I don’t call folks here names with my anonymous forum name.

I don’t blame the bank for my purchase, no one held a gun to me to sign. I blame the greedy financial organizations for helping to make the market crash, and putting the value of my house in the tank. When I bought, the industry was still somewhat innocent, the default swaps, crooked rating agencies, hedge funds, hadn’t gotten fully going with their greedy methods to make money any way they could. The bubble didn’t have to burst so hard, their methods pushed it so big it had to burst.

[sdrealtor]

Gotta admit that there is more than a kernel of truth in that last statement. If prices hadnt gone parabolic at the end of 2003/early 2004 we would be in much better shape. Around me prices literally jumped $100,000 on just about every house and condo between Thanksgiving 2003 and Valentines Day 2004. It was insane. If that hadnt happened and we had continued on a more modest trajectory I beleive the unwinding would be done already. After that we were stuck with these crazy prices and lenders got more and more aggressive making loans to maintain that level. When qualified buyers at those prices were no longer around in big enough numbers they found ways to create loan products for unqualified buyers. From 2005 to mid 2007 loans were made that could not be repaid by the borrowers if the interest rates were 0%. Hell they couldnt ever re-pay them if the interest rates were -2%. Crazy times indeed!

[bearishgurl]

FWIW, I posted that long tirade because the OP’s “underwater” situation was borderline and I believe he could have eventually recovered had he just refied once in ’04 or ’09 thru ’11 and never took cash out. I am fully cognizant of what prevailing rates and terms were during the era of his homeownership for prime, Alt A and subprime buyers.

He also stated that he intended fully on having and raising kids in that house and planned to stay there ten years. He also stated that he is currently renting in Alpine and wishes to purchase there (for more $$ than he spent in Lakeside) and somehow believes it is a better place to raise his children. That is purely subjective, unproven and based upon his posts, I frankly don’t see the OP qualifying to purchase in the $400-$500K range at this time.

It appeared SMH had to sell short because he himself increased his principal amount over the years by taking cash out and repeatedly refinancing. It also appears he (and his agent) were ignorant of the true values of the area (or got caught up in a “bidding war” or both) and he ended up paying too much for the property, initially (which I now feel may have actually been worth $335-$340K at the time). I fully attribute that huge mistake to agent incompetence, since the OP was a 1st-time buyer.

And no, I don’t know the address of the property SMH purchased.

Piggs, I’m not moralizing here and realize a trust deed is a contract. But if every property owner who could afford to pay their mtg got them successfully “crammed down” to the tune of $124K in a successful “short sale” (with a +/- 3-year “slap on the wrist” to their credit), what does this do to the property values of the owners around them? Why should ANYONE keep their mortgages current if they feel they might be even the least bit underwater and see other, more qualified buyers around them purchasing “bigger, newer” properties for less than they paid??

This “strategic defaulter” mindset is a very slippery slope and has far-reaching ramifications for every owner in their immediate area.

I feel the mess this OP made of his credit didn’t have to happen. It was purely voluntary and I feel he needs to OWN it instead of laying the blame somewhere else. The reasons given for his walking, I feel were weak and had little to do with how much he owed.

We all know that if a group home gets permitted on our block or a registered sex offender moves in on our block AFTER we buy and move in, that there is nothing we can really do about that except move. A homebuyer can’t control everything that goes on with every resident in his/her immediate area or subdivision. This happens in “Del Mar” and all the way down the “housing chain.”

Again, I’m not judging you, personally, SMH, but lumping you in with many others who have the same mindset. I could have understood you walking if you purchased in ’05 thru ’07 for a VERY high price and NEVER refinanced or took cash out. But I have little sympathy for strategic defaulters who purchased PRIOR to the “millenium bubble” and not only took cash out but repeatedly allowed refinancing lenders to bamboozle them into exorbitant points and fees, which in many cases, effectively stole more equity from them than the cash they actually extracted from their equity! I don’t think a very large portion of refinancers are actually doing the math to make sure refi closing costs justify how long they will actually carry the new mortgage.

Even if a serial refinancer never extracted any equity, just the fact that they serially refied every time the prevailing mtg interest rate dropped by a fraction of a point, they allowed more of their equity to be `stolen’ each time through closing costs.

Of course, SMH has stated he realizes this now. There is no free lunch here. Again, thank you for putting your situation out there and opening this interesting discussion amongst the Piggs!

[sdrealtor]

once more I ask….Really? Did anyone read that? Really????

[SellingMyHome]

[quote=sdrealtor]once more I ask….Really? Did anyone read that? Really????[/quote]

Lol, it is a bit much… I sense some strong feelings are prompting the diatribes.

[patientrenter]

[quote=SD Realtor] …..the seller is a poster child for why we should not have 0 down loans, or for that matter FHA loans. Forcing buyers to come up with equity (in my opinion at least 20%) would lead to a much more stable market….[/quote]

I nominate Adam for Treasury Secretary. And would you please kick Geithner’s ass on his way out, and hit Bernanke hard every time he buys a MBS including loans with less than 20% down?

[Author]

Posts