Will honest people start doing dirty/crooked things to bail out of their houses

[NotCranky]

“what if you have a HELOC opened but haven’t touched any of the money yet, do you still have a non-recourse loan in place that you can walk away from, or does it complicate the process????”

The HELOC is a completely separate legal instrument from the purchase money deed(s). No problems if it wasn’t used.

[HLS]

Purchase of rental property can be done with 10% down, or less, depending on your credit score. To get a great loan, 25%+ is better, and rates AREN’T that much higher than normal, IF you qualify.
I posted an example of current rates on page 2 of “JOE 401K” thread.

No lender will accept a verbal “we are selling our other house” and not factor in the debt.

Many people have situations where their current loan is only under one spouse. There are many ways to purchase another, including using the other spouse or a friend or relative.
There are homes that people have been living in and paying the mortgage on and they have a pile of equity, but the deed or loan isn’t in their names, it’s a relative.
IF they want to sell, it creates problems regarding taxes etc.

If you live in Temecula, a 2nd home couldn’t be Murrieta. It usually has to be a resort/vacation destination. Idylwild, Big Bear, Palm Springs, etc. but NOT Hemet.

People are just complacent. Even if you guaranteed them that their house was going to drop $100K or $200K or that they could buy the house next door for $50k or $100k less than they owe right now, most people wouldn’t move.

Most people don’t make business decisions nor grasp the severity. It’s just easier to bury their head in the sand and wait for the storm to blow through. Even moving next door requires effort, OR they just don’t want to bother.

I know plenty of people that have plenty of equity that accept that their house is going to drop at least 25%-30% from the peak, but they aren’t going to make any changes. It’s their home, and still worth a lot more than they paid or ever dreamed it would be worth.

[HLS]

Purchase of rental property can be done with 10% down, or less, depending on your credit score. To get a great loan, 25%+ is better, and rates AREN’T that much higher than normal, IF you qualify.
I posted an example of current rates on page 2 of “JOE 401K” thread.

No lender will accept a verbal “we are selling our other house” and not factor in the debt.

Many people have situations where their current loan is only under one spouse. There are many ways to purchase another, including using the other spouse or a friend or relative.
There are homes that people have been living in and paying the mortgage on and they have a pile of equity, but the deed or loan isn’t in their names, it’s a relative.
IF they want to sell, it creates problems regarding taxes etc.

If you live in Temecula, a 2nd home couldn’t be Murrieta. It usually has to be a resort/vacation destination. Idylwild, Big Bear, Palm Springs, etc. but NOT Hemet.

People are just complacent. Even if you guaranteed them that their house was going to drop $100K or $200K or that they could buy the house next door for $50k or $100k less than they owe right now, most people wouldn’t move.

Most people don’t make business decisions nor grasp the severity. It’s just easier to bury their head in the sand and wait for the storm to blow through. Even moving next door requires effort, OR they just don’t want to bother.

I know plenty of people that have plenty of equity that accept that their house is going to drop at least 25%-30% from the peak, but they aren’t going to make any changes. It’s their home, and still worth a lot more than they paid or ever dreamed it would be worth.

[ibjames]

I think this thread should be deleted

[ibjames]

I think this thread should be deleted

[(former)FormerSanDiegan]

Will honest people start doing dirty/crooked things to bail out of their houses

Simple logical answer: NO.
Reason: Once the people do a dirty/crooked thing, they are no longer honest.

(You can thank my Logic 101 Professor for the answer above)

[(former)FormerSanDiegan]

Will honest people start doing dirty/crooked things to bail out of their houses

Simple logical answer: NO.
Reason: Once the people do a dirty/crooked thing, they are no longer honest.

(You can thank my Logic 101 Professor for the answer above)

[23109VC]

those who asked if I was that guy who posted all the questions about buying a house for 350k.. yeah that’s me.

yeah, I’m thinknig ahead about exit strategies IF the $hit hits the fan.

i’m STILL above water. NO house in my area has sold for what I paid. YET. 🙂 I’m one of those complacent people who will NOT sell or move if things just got slightly underwater.

but if it actually fell to 100k less than *I* paid…then I’d start thinking exit strategy.

We have no buyer’s remorse yet. We like our house, like our area, and after considering rents and what we pay to own – we think we are at worse breaking even right now. we could rent for less net dollars – but after factoring in taxes, etc… our mortgage (including HOAs taxes, and factoring the tax savings vs renting) is about what we would pay to rent possibly a smidgen higher to buy…but we didn’t have to incur moving costs/stress…which to us was worth something.

all in all we are still happy. when my house is worth 250k i won’t be happy and will be looking to bail. 🙂 we’ll see if it happens.

i’ll continue to check in from time to time and report what I see. so far I’m still happy with my decision.

[23109VC]

those who asked if I was that guy who posted all the questions about buying a house for 350k.. yeah that’s me.

yeah, I’m thinknig ahead about exit strategies IF the $hit hits the fan.

i’m STILL above water. NO house in my area has sold for what I paid. YET. 🙂 I’m one of those complacent people who will NOT sell or move if things just got slightly underwater.

but if it actually fell to 100k less than *I* paid…then I’d start thinking exit strategy.

We have no buyer’s remorse yet. We like our house, like our area, and after considering rents and what we pay to own – we think we are at worse breaking even right now. we could rent for less net dollars – but after factoring in taxes, etc… our mortgage (including HOAs taxes, and factoring the tax savings vs renting) is about what we would pay to rent possibly a smidgen higher to buy…but we didn’t have to incur moving costs/stress…which to us was worth something.

all in all we are still happy. when my house is worth 250k i won’t be happy and will be looking to bail. 🙂 we’ll see if it happens.

i’ll continue to check in from time to time and report what I see. so far I’m still happy with my decision.

[Eugene]

Two points.

1. Banks will be reluctant to lend money to people who are upside down on their mortgages. The “I’m trying to sell” trick isn’t going to work when your house is worth 250k and you owe 500k in the first mortgage.

2. If I’m not mistaken, zero down loans are usually constructed out of a 20% down first mortgage and a second mortgage/HELOC to cover the down payment. It’s done this way because 20% down waives the PMI requirement, interest on the second mortgage is tax deductible, and PMI is not.

In this situation, first mortgage is non-recourse, but second mortgage isn’t. Who lent you 100k to cover your down payment will try to sue you and collect his money.

[Eugene]

Two points.

1. Banks will be reluctant to lend money to people who are upside down on their mortgages. The “I’m trying to sell” trick isn’t going to work when your house is worth 250k and you owe 500k in the first mortgage.

2. If I’m not mistaken, zero down loans are usually constructed out of a 20% down first mortgage and a second mortgage/HELOC to cover the down payment. It’s done this way because 20% down waives the PMI requirement, interest on the second mortgage is tax deductible, and PMI is not.

In this situation, first mortgage is non-recourse, but second mortgage isn’t. Who lent you 100k to cover your down payment will try to sue you and collect his money.

[seattle-relo]

I believe if the second was to purchase the home, it is also considered a nonrecourse loan.

[seattle-relo]

I believe if the second was to purchase the home, it is also considered a nonrecourse loan.

[SD Realtor]

23VC why would you bail? You purchased the home after going through the angst of many a post and I am sure many a calculation on your part. You knew going in that the market was indeed going to depreciate but I thought that your purchase was a long term decision… that you would be in the home come hell or high water for many years.

Honestly I am puzzled and became puzzled when you wrote that you are thinking about exit strategies if the sht hits the fan. If? If? You know it is not if but when.

Repeat this phrase 1000 times. A house is not an investment. You bought this home on the premise that it was NOT in investment but because you wanted to buy a home and live in a home. It seems that some of the parameters that you listed in order to justify your original purchase are not true anymore. However if you think that prices will not drop more, and not drop by alot more… and you are going to let that eat at you… then by all means you should sell now instead of wait for later.

SD Realtor

[SD Realtor]

23VC why would you bail? You purchased the home after going through the angst of many a post and I am sure many a calculation on your part. You knew going in that the market was indeed going to depreciate but I thought that your purchase was a long term decision… that you would be in the home come hell or high water for many years.

Honestly I am puzzled and became puzzled when you wrote that you are thinking about exit strategies if the sht hits the fan. If? If? You know it is not if but when.

Repeat this phrase 1000 times. A house is not an investment. You bought this home on the premise that it was NOT in investment but because you wanted to buy a home and live in a home. It seems that some of the parameters that you listed in order to justify your original purchase are not true anymore. However if you think that prices will not drop more, and not drop by alot more… and you are going to let that eat at you… then by all means you should sell now instead of wait for later.

SD Realtor

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