Should we take the money??

[Coronita]

[quote=bearishgurl]I just have a couple of comments on this thread. The first one (now water under the bridge), is that the OP absolutely could have bought a 1700-2200 sf home in SD County in 2011 for the price they paid for a 1300 sf home in SEH ($330K). Sure, it would have been older and most likely needed cosmetic upgrades but they spent that money anyway on the smaller, newer home they bought. And it would have been without MR and HOA dues, (which could now have proven to be a financial thorn in the OP’s side).

[/quote]

You know, telling people that they could have done something back in 2011 is as useful as someone telling you, you could have bought a lot of homes in 2011 instead of staying put in Chula Vista, and your appreciation probably would have been a lot better. The point is you can’t go back in history and change things, so why bother even bringing it up? It doesn’t really help the person. Besides San Marcos is on the way up and for growth, whether you want to believe it or not.

[quote]
The second thing is that Piggs counseled the OP in error re: priority of unsecured debt, i.e. consumer/credit-card debt.

CC companies and their collectors …. (etc etc etc)
[/quote]

The point was that you have more options if leave your home equity alone versus risking your home to pay off credit cards, car loans, etc first. if you pay up all your insecure loan first and then have financial problems, you have no other options on dealing with now your mortgage + HELOC. How many of those loan mods really worked???And even more so how many people expect they’ll successfully get one now…

Anyway, you are correct in one thing. If the OP really does get into that big financial problem such that they need to consider BK, they definitely should talk to an attorney, I’m not an attorney (and there’s a reason for that) in as much as neither are you, as are many others commenting on this thread.

That said, I don’t think the OP is in immediate danger if they take care of their finances with some of the constructive suggestions people offered here in reducing expenses and debt.

[bearishgurl]

[quote=flu][quote=bearishgurl]I just have a couple of comments on this thread. The first one (now water under the bridge), is that the OP absolutely could have bought a 1700-2200 sf home in SD County in 2011 for the price they paid for a 1300 sf home in SEH ($330K). Sure, it would have been older and most likely needed cosmetic upgrades but they spent that money anyway on the smaller, newer home they bought. And it would have been without MR and HOA dues, (which could now have proven to be a financial thorn in the OP’s side).[/quote]You know, telling people that they could have done something back in 2011 is as useful as someone telling you, you could have bought a lot of homes in 2011 instead of staying put in Chula Vista, and your appreciation probably would have been a lot better. The point is you can’t go back in history and change things, so why bother even bringing it up? It doesn’t really help the person. Besides San Marcos is on the way up and for growth, whether you want to believe it or not.[/quote]

I understand all this, flu. I myself had the same family makeup as the OP once upon a time. None of the homes we purchased in SD were less than 1700 ft (avg 1900 sf). We had cats instead of dogs (who need more room) but 1300 sf just seems small to me for this OP’s family size and pets (don’t know their lot size). It is entirely possible that they will need more room going forward but obviously would have to get their finances sorted out better before attempting to try to qualify for another mortgage.

Also, I want to add that the OP did not factor in their remodel costs or potential sales costs in their assumption that they will recover $170K “profit” upon sale. A more realistic assessment of their true “profit” could be had by subtracting their remodel costs and also subtracting $30-32K in selling costs from the sales price (if it sells for $500K). That remodel $$ either came out of their pockets or they increased their mortgage(s) by all or part of the remodeling costs. Either way, they have paid for or will pay for it if it is sold. Their true “cost basis” is actually equal to the cost they paid for the property + their remodeling costs + all or part of any mortgage closing costs it took for them to obtain the needed funds for the remodel.

Back in the day, I grew up in a family of 5 + cat and dog in 1530 sf with a detached oversized 2-car garage on a 1/4 AC lot. But we had 1/2 to 1/3 of the consumer goods a typical family now has because they did not exist at that time. It was still crowded in the house at times and regularly in the two bathrooms. And we did park in the garage and had room on the lot to play and room to roller skate in the garage.

Just because the current local RE market is in a trough (in CA, 2009 thru 2011, give or take a few months depending on county), it doesn’t mean that everyone has the ability to buy at that time. And not everyone has the choice of where to live if they are sharing kid(s) with the other parent in a court-ordered custody timeshare arrangement. Yes, I most certainly would have bought a ~1300 sf retirement home for myself in South Lake Tahoe in the last quarter of 2009 and immediately lease it out if I had been able to perform at the time. By the time I was able to actually buy RE (last quarter of 2012), the same $175-$200K house was $350-$375K. However, I am still considering buying a fixer property there as SLT prices are still reasonable in relation to other NorCal counties. And El Dorado County is on the list for Base Assessment Transfer apps (Prop 90) which makes it even more attractive to retirees.

We can’t always choose our circumstances to coincide perfectly with RE buy/sell peaks and troughs.

I’m still happy with my home but it is too big for me and the lot is too much work for one person. Yes, you are correct that Chula Vista RE hasn’t completely recovered from the Great Recession, evidenced by =>50% short-sale listings and still has too much “shadow inventory” in the more recently annexed zip codes. I am also concerned that nearby “owners'” situations (who have 40-year “permanent” mods in place) will implode sooner rather than later and would like to exit before this happens. I do not believe the mods offered by the Big Banks are doing any distressed home”owner” any favors. Most even have equity-sharing provisions in them (to recover back interest owed while the home”owner” was squatting) if the home”owner” sells the property before a designated future date.

Chula Vista is actually a very nice place to live, especially close in to SD Bay. But … it was very hard hit by subprime buyers and ATM borrowers (also subprime) in recent years. Thus, its RE values aren’t yet what they should be.

[quote=flu][quote=bearishgurl]The second thing is that Piggs counseled the OP in error re: priority of unsecured debt, i.e. consumer/credit-card debt.

CC companies and their collectors …. (etc etc etc)[/quote]The point was that you have more options if leave your home equity alone versus risking your home to pay off credit cards, car loans, etc first. if you pay up all your insecure loan first and then have financial problems, you have no other options on dealing with now your mortgage + HELOC. How many of those loan mods really worked???And even more so how many people expect they’ll successfully get one now…

Anyway, you are correct in one thing. If the OP really does get into that big financial problem such that they need to consider BK, they definitely should talk to an attorney, I’m not an attorney (and there’s a reason for that) in as much as neither are you, as are many others commenting on this thread.

That said, I don’t think the OP is in immediate danger if they take care of their finances with some of the constructive suggestions people offered here in reducing expenses and debt.[/quote]

flu, I’m not advocating here that the OP take out a HELOC. I think she mentioned only having $5K in CC debt. That is still manageable and fairly easy to pay off if they don’t put more purchases on the card(s).

I think the suggestions already mentioned here re: the OP’s vehicles are good. The Prius is a very good vehicle but I had never priced them and had no idea they cost as much as they do until I saw this thread! They are small in size for this size family and not a luxury vehicle so the price seems pretty high to me. I agree about dumping the van lease ASAP and buying a $4-6K vehicle to shuttle around the kids with and fix when it needs a repair. The insurance on it would be much cheaper (liability only). I agree that is it way cheaper to keep repairing a 5-15 yo vehicle than buy a new or late model vehicle (esp repairs for a used American vehicle).

I myself drove a half-dozen 5-15 year-old Japanese vehicles all of my working life while raising kids and working FT in dtn SD every day (leaving it in an outside comm’l pkg lot all day) and they never broke down to/from work because we kept them maintained. I bought them for $700 to $6000 cash (had to fix the $700 vehicle before I could even drive it to work). Occasionally, I needed a jump-start in the dtn pkg lot but always carried jumper cables with me (relatively cheap problem to fix). At all times, I drove kid(s) around in them when off work. I eventually sold ALL of them for nearly as much as I paid several years after purchase, due to them having good maintenance and newer paint/tires.

There are a lot of economical ways to raise a family in SD County and going into debt for necessities (except RE) is not something I ever did. I have also taken (and still take) long road trips 1-2x year (avg 4K miles each) with a 12-24 yo vehicle and have only been towed (20 mi) once (in NM), got the needed repair in the small town of Moriarity the next morning and got back on the road by 10 am. My ins co paid for the tow. I have had relatives who visited me here (from their homes 1700 miles away) in their restored 1950’s American vehicles. One of them loves cruising in their Bel Air convertible (w/white fins) along the coastline! To each his own.

I don’t see this OP as potentially needing to file for BK protection. They are fine but just need to tighten their belts. Also possibly get another job, full or PT (not sure if the OP works). That alone would solve their entire problem and move them into the black in less than one year.

This past Friday, I spent 1.5 hrs at the recorder’s office combing public records doing a cursory BR check on four individuals for a work project. Surprisingly, two out of the the four people had Ford Motor Credit and GMAC liens, one of which was fairly recent and the other one a refile. I feel that these judgement liens resulted from the filing of (collection) suit for residual loss taken by the creditor after repossession and resale. One was for $7944 and the other was ~$9700 (ironic that I ran across two of these out of four random subjects). That is a LOT of money to be upside down on during the first five years of ownership while making (~60 months?) of payments! The residual loss alone is enough to buy a really, really nice 5-15 yo vehicle (even a “luxury” vehicle)! I’m fairly certain that repossessed vehicles are typically cleaned up, gone thru and some parts are replaced before being marketed for sale. I know this because I once bought a repossessed Japanese vehicle from a dealer off of Miramar Road in SD for 28% under blue book and there were several other dealers at the time specializing in repossessed vehicles in the same block and area (vicinity of the RR tracks). So the residual loss taken by creditors and financing dealers after repossession results from nearly 100% “depreciation.”

For the life of me, I don’t understand why people finance 90% or more of the purchase price on brand new vehicles, or worse, trade in their slightly used vehicle (for which they still owe a balance on) for a new vehicle. (Not saying the OP did this.) To me, that’s financial suicide.

And no, I’m not Suze Orman but just tell it like I see it 🙂

[svelte]

[quote=bearishgurl]I just have a couple of comments on this thread. The first one (now water under the bridge), is that the OP absolutely could have bought a 1700-2200 sf home in SD County in 2011 for the price they paid for a 1300 sf home in SEH ($330K). [/quote]

Once again you have no clue what you’re talking about. The OP did not buy in SEH.

[scaredyclassic]

At under 1 percent interest for 5 y. It seemed reasonable to finance 100 percent of our cars.

[bearishgurl]

It is really immaterial whether the OP resides in SEH … or not, svelte. My point was that they are paying (entirely voluntary) MR and HOA dues because they had/have many housing choices in this county.

Here’s a “random” article for you to chew on:

San Marcos Mello-Roos

All homes in San Marcos built between 1988 and present are part of a Mello Roos District (aka Community Facilities District, CFD). A Mello-Roos District/CFD is an area of homes in which homeowners are obligated to pay a special property tax on top of a standard property tax. This special tax is used to help pay for a lot of the same facilities and services that a standard property tax pays for, such as streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police/fire protection.

(emphasis mine)

Property Tax & Mello-Roos

Instead of chastising me, why don’t you give the Piggs a ballpark estimate of the OP’s monthly MR + HOA dues? After all, you are our “resident expert” on SM, no?

As an “uninformed observer,” I’ll just take a random stab at what the total monthly nut is and you let me know how close I am, okay?

For the OP’s size house:

$225 mo MR and $150 mo HOA dues, totaling a $375 mo dent in their strained budget.

I haven’t even tried to find any listings around there … this is just my guess.

How am I doing, svelte??

[bearishgurl]

[quote=scaredyclassic]At under 1 percent interest for 5 y. It seemed reasonable to finance 100 percent of our cars.[/quote]Yes, scaredy, under 1% is a great rate on a new car loan (not avail on late-model “certified” used cars).

I can’t remember what the OP said their auto loan interest rate was (9-10%?) but it was much higher than <1%.

[Coronita]

[quote=bearishgurl]It is really immaterial whether the OP resides in SEH … or not, svelte. My point was that they are paying (entirely voluntary) MR and HOA dues because they had/have many housing choices in this county.

Here’s a “random” article for you to chew on:

San Marcos Mello-Roos

All homes in San Marcos built between 1988 and present are part of a Mello Roos District (aka Community Facilities District, CFD). A Mello-Roos District/CFD is an area of homes in which homeowners are obligated to pay a special property tax on top of a standard property tax. This special tax is used to help pay for a lot of the same facilities and services that a standard property tax pays for, such as streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police/fire protection.

(emphasis mine)

Property Tax & Mello-Roos

Instead of chastising me, why don’t you give the Piggs a ballpark estimate of the OP’s monthly MR + HOA dues? After all, you are our “resident expert” on SM, no?

As an “uninformed observer,” I’ll just take a random stab at what the total monthly nut is and you let me know how close I am, okay?

For the OP’s size house:

$225 mo MR and $150 mo HOA dues, totaling a $375 mo dent in their strained budget.

I haven’t even tried to find any listings around there … this is just my guess.

How am I doing, svelte??[/quote]

I don’t know why you keep grinding the axe on homes with HOA or Mello Roos. It’s beside the point of this thread. The person already made the home purchase, and at this point the OP’s financial situation is not the issue, it’s all the other debt that’s the issue. It’s hardly helpful to tell the OP everything he/she should have done 3-4 years ago in as much as people who keep telling you that you should have bought rental property 3-4 years ago.

Looking at the OP’s financial strain, HOA and Mello Roos is the least of their worries. I don’t understand why you continue to try to convince others on your personal preference to live in home that doesn’t have HOA or Mello Roos. Because that’s what it is…Personal preference.

But since this is already unrelated to the OP’s post, I think a post ago, I already shown that if I purchased a $1million home in some parts of SD without mello roos versus in Carmel Valley, my property taxes would actually end up being more than a home in Carmel Valley.

Yes, Mello Roos for my home in Carmel Valley exists. But it’s a flat fee. Other parts of SD pay all these extra bond initiatives that are a % of assessed value. My rentals in Mira Mesa are such an example that have all these ridiculous bond initiatives that don’t exist in Carmel Valley. So for a high cost home, it’s actually less in Carmel Valley than say Mira Mesa if one buys a $1million home in both places.

Don’t believe me? Look it up yourself.

And lastly, to pre-empt what you might say about the deductibility of mello-roos on your taxes, the IRS already ruled that Mello-Roos is deductible years ago, and since CA follows the IRS, it’s deductible as well on your state taxes. Of course, if you’re like me and get hit with AMT every year, it doesn’t matter since for AMT, property taxes paid don’t count.

[bearishgurl]

[quote=flu][quote=bearishgurl]It is really immaterial whether the OP resides in SEH … or not, svelte. My point was that they are paying (entirely voluntary) MR and HOA dues because they had/have many housing choices in this county.

Here’s a “random” article for you to chew on:

San Marcos Mello-Roos

All homes in San Marcos built between 1988 and present are part of a Mello Roos District (aka Community Facilities District, CFD). A Mello-Roos District/CFD is an area of homes in which homeowners are obligated to pay a special property tax on top of a standard property tax. This special tax is used to help pay for a lot of the same facilities and services that a standard property tax pays for, such as streets, water, sewage and drainage, electricity, infrastructure, schools, parks and police/fire protection.

(emphasis mine)

Property Tax & Mello-Roos

Instead of chastising me, why don’t you give the Piggs a ballpark estimate of the OP’s monthly MR + HOA dues? After all, you are our “resident expert” on SM, no?

As an “uninformed observer,” I’ll just take a random stab at what the total monthly nut is and you let me know how close I am, okay?

For the OP’s size house:

$225 mo MR and $150 mo HOA dues, totaling a $375 mo dent in their strained budget.

I haven’t even tried to find any listings around there … this is just my guess.

How am I doing, svelte??[/quote]

I don’t know why you keep grinding the axe on homes with HOA or Mello Roos. It’s beside the point of this thread. The person already made the home purchase, and at this point the OP’s financial situation is not the issue, it’s all the other debt that’s the issue. It’s hardly helpful to tell the OP everything he/she should have done 3-4 years ago in as much as people who keep telling you that you should have bought rental property 3-4 years ago.

Looking at the OP’s financial strain, HOA and Mello Roos is the least of their worries. I don’t understand why you continue to try to convince others on your personal preference to live in home that doesn’t have HOA or Mello Roos. Because that’s what it is…Personal preference.

But since this is already unrelated to the OP’s post, I think a post ago, I already shown that if I purchased a $1million home in some parts of SD without mello roos versus in Carmel Valley, my property taxes would actually end up being more than a home in Carmel Valley.

Yes, Mello Roos for my home in Carmel Valley exists. But it’s a flat fee. Other parts of SD pay all these extra bond initiatives that are a % of assessed value. My rentals in Mira Mesa are such an example that have all these ridiculous bond initiatives that don’t exist in Carmel Valley. So for a high cost home, it’s actually less in Carmel Valley than say Mira Mesa if one buys a $1million home in both places.

Don’t believe me? Look it up yourself.

And lastly, to pre-empt what you might say about the deductibility of mello-roos on your taxes, the IRS already ruled that Mello-Roos is deductible years ago, and since CA follows the IRS, it’s deductible as well on your state taxes. Of course, if you’re like me and get hit with AMT every year, it doesn’t matter since for AMT, property taxes paid don’t count.[/quote]

Carmel Valley residents just haven’t voted in any recent bond issues, yet, flu. Most of that bond indebtedness in certain tracts’ tax bills is due to school construction bonds. Just wait until your gargantuan rental/condo complex is built and all those tenants move in and want *new* schools because their kids are sitting on the floor in your existing schools! Tenants will vote in bond issues because they don’t get tax bills and don’t really know or care how much it is.

I agree that MR is likely tax deductible and that is good for “middle-class” and upper MC homeowners. HOWEVER, for “moderate income families” (the OP’s? … again, just guessing) whose annual household income =<$100K, how much writeoff do they really need when they have three kids to use for the standard deduction, totaling five exemptions plus the child tax credit?

$8K? year mortgage interest
$3800? year property taxes
$2700? MR payments

Does the OP in this example have even more deductions than this and can they really use them all?

My mtg interest is currently <$5K per year and my property taxes are ~$4K. I have always had a low/moderate income for 1-3 people and have never taken more than 2 exemptions in any one year (and some years just myself) and I have never been able to use all my deductions, with or without my deductible medical insurance premiums in the mix.

What’s the point of having another tax deduction if you don’t need it?

[spdrun]

[quote=scaredyclassic]At under 1 percent interest for 5 y. It seemed reasonable to finance 100 percent of our cars.[/quote]

Only if you’re dead set on buying new. And having a financed car has other issues. With a house where you got a good deal, you can always put anything personal into storage and rent it out for a year, negating the mortgage payment if you want to spend a year outside the US. With a car, you’re tied down until you pay off the loan. Plus, you can’t go with liability-only for insurance, or make the car uninsured and non-op if you don’t plan to use it.

[scaredyclassic]

True. But I think this is my last car ever. I’m gonna give it away when the last kid leaves and switch to electric bicycles.

We just cleaned up our living room and threw out some furniture and it looks like a new house.

We are very messy people…

[Balboa]

[quote=bearishgurl]

Tenants will vote in bond issues because they don’t get tax bills and don’t really know or care how much it is.

[/quote]

Or, because they believe there should be adequate schools for the population.

–Childless Voting Tenant with a Mostly Public Education

My aunt and uncle are finance DINKs in another state and gripe about how much they are taxed for schools they don’t use. I love them, but it kills me that they take this view of public education. I get being aggravated by being heavily taxed for poor quality schools, but the schools around them are thoroughly excellent. I’m sure they’ll be touting them when they sell to retire to wine country.

In the spirit of being off topic, this is a fascinating (audio) account of school board funding politics: http://www.thisamericanlife.org/radio-archives/episode/534/a-not-so-simple-majority

Plenty of ink available on that story as well.

[lpjohnso]

Hi all, I’m popping in to read the new posts. Thank you all so much. 🙂

House was built in 1992. 10,000+ square foot lot. It is in a section of Discovery Hills that DOES NOT have mello roos or an HOA. We were shocked about that when we bought it. There are homes just one block away that look very similar and built around the same time, and they DO have fees. For whatever reason, we don’t, and we aren’t complaining!

[bearishgurl]

[quote=lpjohnso]Hi all, I’m popping in to read the new posts. Thank you all so much. 🙂

House was built in 1992. 10,000+ square foot lot. It is in a section of Discovery Hills that DOES NOT have mello roos or an HOA. We were shocked about that when we bought it. There are homes just one block away that look very similar and built around the same time, and they DO have fees. For whatever reason, we don’t, and we aren’t complaining![/quote]

Good for YOU, lp! Glad you got that 10K sf lot for your kids (and pets)! Your lot must have been in a group of lots which were actually subdivided in 1987 or PRIOR and held by the developer or another party they eventually purchased it from.

Your 10K sf lot somewhat negates the fact that you have a smallish house. A larger lot covers a lot of drawbacks of a smaller dwelling, imho.

[bearishgurl]

I’ve posted this before here, but CFDs in Eastlake Shores (Chula Vista) were actually the first CFD’s created in SD County (first sold in 1987) with the City of Poway coming in second (not sure of the subdivision). Eastlake Shores subdivisions on the north and west side of the lake (five, I think, incl one condo complex) were the debut CFDs in San Diego County.

Eastlake Hills was developed in tandem to Eastlake Shores and immediately after, with one subdivision having 20 year bonds (instead of the typical 30 years). Those bonds were retired between May and August 2007, depending on phase number of the tract.

[Coronita]

[quote=bearishgurl]
Your 10K sf lot somewhat negates the fact that you have a smallish house. A larger lot covers a lot of drawbacks of a smaller dwelling, imho.[/quote]

Well, that was an interesting way to pee on someone’s cornflakes, so to speak. Why is someone’s home size such a big deal? The point of this post was OP was asking for advice on whether he/she should tap into their equity to pay other debt.

Not that the point of this thread is to discuss San Marcos real estate. But, I’m sure it’s a nice house, and in a great area. It has appreciated well and will most likely continue to do so, since it’s a good area with good schools.

We get it. You like Chula Vista. You think it’s the biggest bang for the buck. You think for the same money OP spent 3 years ago, they could have bought a bigger house in places like Chula Vista, because that’s what you would have done. Good for you. You like living in Chula Vista, you would prefer living there versus living in San Marcos. For you, it’s where you want to be versus anywhere else. Good for you. Be happy with your decision.

Don’t get why you need to bring chula vista into this thread or many others. It’s like the same way you brought up about how terrible you think Carmel Valley is because once upon a time there was a migrant worker camp/shack off of 56. Yes, San Marcos re-appreciated much quicker than Chula Vista. Heck, Carmel Valley and Mira Mesa and even Santee did better too. It is what it is.

[Author]

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