[SellingMyHome]

I’m not blaming my bank personally, sorry if it read that way. I’m blaming the greed in Wsll Street that made the resulting problems in 2007…

Many people like me thought we were doing the smart thing, we didn’t plan on losing our house. Some people bought what they couldn’t ever afford, and that was wrong. It was the greedy bastards that bet our investments on us losing. Credit default swaps…

[SellingMyHome]

[quote=bearishgurl][quote=SellingMyHome][quote=bearishgurl]

SMH, that was another intent of my long post . . . to show you, and others like you, in finite detail, where you erred in each step of the process. Maybe you knew where some of your errors were and maybe you didn’t.
[/quote]

And I’m sure others will appreciate it. But, when you pasted in two tables of 30 years of payments, you lost your audience. Presentation is key, and finite detail killed your presentation…

Thanks again for spending time to discuss the issues. What I’m really looking forward to is learning how to do things right in the future, if it’s continuing to rent forever, or spending the proper time researching before buying…[/quote]

It was only 8 years of payments, SMH. You bailed in the 6th year, even though it was your intent to stay there =>10 years. I have actually never used amortization tables on this blog, but thought it would be useful for you to see how your purchase money loans would have amortized if you left them alone.

I have some suggestions for “doing things right in the future.”

1. Save up enough for at least a 20% downpayment + closing costs and at least a $10K “slush-fund” (for reserves and to buy a bag of fertilizer, etc after you move in). I don’t know how old you are, but if you have to quit feeding your retirement accts for awhile to do this, it might be worth it. I really feel that prices will hold fairly steady in the next 3 years, depending on area. Some areas which did not have much distress to begin with, may go up slightly. Your preferred area of Alpine has had a lot of distress and also suffered from a devastating fire in recent years so I don’t see the prices going up very fast there in the next 3 yrs, if at all. HOWEVER, the presence of a new, modern HS in Alpine could very well make it a more desirable destination for families, thus there could be an uptick in prices upon the school’s completion. GUHSD is currently spending a FORTUNE building that school and also rehabbing and expanding Granite Hills HS.

While tightening your belt and saving as much as you can:

-become intimately familiar with all of your desired areas by driving them repeatedly on different times and days and pulling plat maps of those streets or subdivisions from the assessors office. Find out what those owners are paying for fire ins coverage and also the exact amount of annual MR bonds (if applic) and HOA dues (if applic). Do not trust RE agents to tell you how much annual MR is. You need to research it yourself.

-If your desired area is custom semi-rural or rural, talk to some of the homeowners working outside and find out if their street is hooked up to sewer. If not and it is an older tract, find out where the septic tanks are located (front, side, back) and if the back yards are sloping up or down on either side of the st. Try to go to some open houses around there to see how the back yards lay and how far the leachfields are from the dwellings. Find out if well water is available. If it is and the pump is operable, this will save you a FORTUNE!

-Learn everything you can about the values in your desired area. If it is an older tract, learn what those properties were built as PRIOR to all the complete remodels and room additions you now see on the street. Comb thru recent solds online and find out why they sold for what they did (distress sale, custom woodwork, expensive outdoor hardscaping, etc).

-Do not buy on any dark residential streets surrounding Viejas casino, even if not the primary route to/from. They are routinely driven by drivers who may have had too much to drink and even may be temporarily “lost.”

-Run the hard monthly numbers on a “prime” or “Alt-A” mortgage with the assumption that your FICO score is at least 745 (and preferably higher). DO NOT buy with a 1st and 2nd TD purchase money! Buy ONLY with a 1st TD of 80% LTV or less and endeavor to get it with as low of an interest rate as possible without paying points.

-Comb your old settlement statements for all the points and junk fees you paid in the past and DO NOT continue on with the mtg process if your GFE has charges on it that were not discussed with you at the time of application. Perhaps more direct lenders will come back in the picture in the coming months/years which would eliminate “middlemen” and possibly lessen closing costs and fees.

-Most importantly, do NOT buy without knowing what that home will cost you monthly in total, incl all utilities. I would also suggest you stay away from 30/5’s, 30/7’s, I/O’s and ARMs and only agree to a fixed rate mtg as your current responsibilities are such that you need to have predictable housing expenses for many more years.

There is much more but you can start with the above. I wish you the best of luck, SMH![/quote]

Why put 20% down? When I run the rent vs buy calculator at NYTimes, the higher deposit makes it better to rent, assuming a 6% or higher ROI, which long-term is doable.

Why not put the 3.5% down? The next house I buy will be my last, if nothing changes with jobs, health, etc. Aren’t interest rates so low now that it makes sense?

I know a lot of people here wish that folks never could have bought with zero or little down, as it allowed many people to walk away with no loss.

I’m really still a little (a lot in some of your eyes) clueless as to why a higher down payment is a better thing for me.

[SellingMyHome]

[quote=bearishgurl]

SMH, that was another intent of my long post . . . to show you, and others like you, in finite detail, where you erred in each step of the process. Maybe you knew where some of your errors were and maybe you didn’t.
[/quote]

And I’m sure others will appreciate it. But, when you pasted in two tables of 30 years of payments, you lost your audience. Presentation is key, and finite detail killed your presentation…

Thanks again for spending time to discuss the issues. What I’m really looking forward to is learning how to do things right in the future, if it’s continuing to rent forever, or spending the proper time researching before buying…

[SellingMyHome]

[quote=sdrealtor]Awesome post BG! It took me 3 sentences to show you were clueless and you followed up by handling the task in only 2 words! Bravo![/quote]

HEY! KNOCK IT OFF!

You all need to get back to telling me how I, and others like me, ruined the market. Then go back and show me exactly where I erred, taking the time to show me in finite detail where I erred at each step in the process. Then ask me why I didn’t sell my house at the top of the market, because everyone knew when the top was, right?

[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.

[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.

[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.

[SellingMyHome]

[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]

I may have paid too much (in hindsight definitely). I also should have sold at the top, dumb me. I did probably pay too much for refi. I have learned a lot here in the last two years, 8 years too late!

I do hope my story has helped others see inside the evil mind of a strategic defaulter…

[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….

[SellingMyHome]

[quote=flu][quote=SellingMyHome]Yes, it is crazy that I will be able to buy again in 18 months with only 3.5% down. With two young kids, I want this to be our house for the next 20+ years. I will spend the next 18 months carefully weighing the decision to buy.

Do you think I am proud of short-selling? Nope, and don’t want to do it again. I may be the minority in my class, but maybe not. I have a feeling the banks will still be willing to lend to me, because besides the short sell, everything else looks good for us on paper.[/quote]

I don’t care about whether you short sold or not…

The fact of the matter is you have 3.5% in savings for your next purchase is alarming at best…. You have two kids…Your expenses are not going anywhere but up….You do want you kids to go to college, right? You do want your kids to be able to go attend some outdoor activities, right? All these things add up..It might not right now, but as your kids get older, it will..

How much are you going to be really able to keep for yourself after all your liabilities, including this new purchase + your estimated child raising costs?? You do have an estimate of that, right? If you don’t , I think you need factor that in too..While walking away again would be a perfectly acceptible solution, decimating your already low savings is not…I think the bigger concern is you don’t want to end up being in a financial trainwreck 2.0 in the coming years….

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]

I’m a spreadsheet geek, have all that.

I have a government pension, so I’m set on that end. I even used to put money into my 457. Wife has a 401K maxed out, and SS, so fingers crossed there. We put money in 529 college fund for kids…

[SellingMyHome]

Yes, it is crazy that I will be able to buy again in 18 months with only 3.5% down. With two young kids, I want this to be our house for the next 20+ years. I will spend the next 18 months carefully weighing the decision to buy.

Do you think I am proud of short-selling? Nope, and don’t want to do it again. I may be the minority in my class, but maybe not. I have a feeling the banks will still be willing to lend to me, because besides the short sell, everything else looks good for us on paper.

[SellingMyHome]

[quote=bearishgurl]

I have few questions here for you … to gain a complete understanding of your then-situation …

1) What what the total amount forgiven in your (2010) “short sale?” Did you only have ONE lender at the time of closing your “short sale?”

ANSWER: $124,000, one lender

2) Did you purchase the “shorted” property in 2003 with one mortgage only or two mortgages?

ANSWER: One lender

3) What was the percentage of your downpayment in 2003?

ANSWER: 0%

4) Was your purchase-money mtg (orig 2003 mtg) a VA, FHA or conventional mtg?

ANSWER: Conventional

5) Was your “shorted” mtg a VA, FHA or conventional mtg?

ANSWER: Conventional

6) How many actual times did you refi this property? Do those times include the time you took out the $15K 2nd TD which you state you used for improvements to the property?

ANSWER: Twice, yes

7) What was your FICO score at the time you purchased the property you sold short?

ANSWER: Don’t know for sure, was really good then, 30 years old with 12 years credit history

8) Since you state your (current?) FICO score is in the “low 700’s,” what (fixed) rate and terms do you think you can expect to obtain today if you were to try to obtain another purchase-money mtg?

ANSWER:today, nothing, we still are only 18 months from the short sale, so don’t expect anything yet. I have heard three years after for FHA, unless we have 20% down.

9) What is your current price range for a new home?

ANSWER:$400-$500K

10) What type of mtg do you now hope to qualify for to purchase a property today (ie VA/FHA/Conv)?

ANSWER: FHA in 18 months (3 years after short)

11) What is the percentage of downpayment you now plan to use if you are able to purchase?

ANSWER: 3.5%

12) At the time you decided to “walk” on your old property, did you think that “Lakeside 92040” was somehow a bad place to raise a family or had “bad schools?” And, if so, if you planned on having kids when you bought the Lakeside property, why did you even buy there in the first place?

ANSWER: When getting ready to walk, we then thought our neighborhood and elementary school was not “good” enough. Bought the house in 2003 with no kids planned for about 5 years from then.

13) You state the house was too small. If you knew you were planning on raising a family there, then why didn’t you purchase something bigger (or use your “cash-out” equity to add more square footage)?

ANSWER: Didn’t plan on kids for 5 years, thought we would be making more income by then, plus have some equity to sell and move up. (Yep, I really, honestly, innocently thought that then!!!!)

14) What was the lot size of the property you sold short? If over 10K sf, do you think you can now afford to purchase a property with that size lot?

ANSWER: lot: 7,900 SF, house: 1,800. I would like more lot size (1/2 acre) and about 2,000 SF, but up here in Alpine now.

15) Hypothetically, had you NEVER refied and/or took “cash out” and kept making payments and DID NOT sell short, do you think you will still be underwater today? If so, by how much?

ANSWER: WAY underwater, from $435K to $301K = $134K

16) Are you aware that permits for “board and care” and “group homes” of every kind are obtained by owners in EVERY part of the SD County (even areas encumbered by HOAs) and in areas of ALL price levels?

ANSWER: Sure, but this was bad. My wife is a nurse, dad’s in a nursing home, Mom has Alzheimer’s; nothing against sick and elderly, not a fan of group home that was a normal home before, but was given a 10′ chain link fence around it…

17) In hindsight, if your FICO score dropped at least 150 points by selling short, do you now think it was “worth it” to do so, given the much tougher lending standards of today?

ANSWER: Well worth it. Initial hit did not hurt us. Now only about 100 points below, and still rising.

****************************************

SMH, it just seems a little odd to me that you should have been as “underwater” as you have stated from a 2003 purchase unless . . .

-you put little to nothing down when purchasing it;

ANSWER: Nothing down for 2003 purchase and subsequent refi’s.

-you paid far MORE for it than the nearby “sold comps” at the time you purchased;

ANSWER: Comps were good

-you had an interest rate above 7% on your purchase-money note (and possibly subsequent notes encumbered by 1st TDs) or were paying I/O on one or more mtgs encumbering this property;

-you repeatedly refied “cash out” along the way (whether thru refi, 2nd TD or HELOC);

ANSWER: Did Cash out and rolled in closing costs.

-you signed up for points and a lot of junk fees with each “refi”;

I understand you decided to exercise your legal right to walk away and that you are not alone.

If there is any more light you can shed on your “story,” it would be very instructive and informative for the Piggs.

And no, I didn’t post this to try to solicit biz…[/quote]

Hope my answers above helps. I may have been less than honest when posting in 2009, as I was still in the middle of trying to get the bank to approve short-sale. 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).

Some of the other posters think I am still short-sighted or have a lack of introspection. I was short-sighted in 2003, but not now. I did a lot of introspection in 2009, believe me. The short sell was the best option, I do not regret it.

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 have had some good laughs watching the death of the flipping shows on TV.

I don’t think strategic short sellers are having as much impact on the market and economy as some think. It was doomed badly when default swaps and such greed outgrew common sense.

I’m here asking questions again to see if and when I should buy again. Like I said, my wife and I both like the idea of owning our own home, she more than me. I like not worrying about house maintenance and repairs anymore, not looking forward to that. I’ve learned a lot from the pros around here, even those with brutally honest assessments. I do prefer those that at least try to pretend they aren’t judging me without knowing my whole story.

[SellingMyHome]

[quote=walterwhite]Oh I knew. I have live witnesses who thought I was a nut in 03.[/quote]

I’m sure a few people knew, not doubting that. You’re not the one calling people idiots though either…

[SellingMyHome]

[quote=eavesdropper][quote=SellingMyHome]…I bought in 2003 (halfway up the price rises), and thought it was going to be a starter home, one to live in for a few years, and then upgrade when we had kids. Well, the kids came along, but the market crashed. For several reasons, we decided to get rid of the house. It was a strategic move on our part, as there was no way the house was going to sell for a profit in the next 10-15 years.

So, now we are capable of buying again. To me it looks like the market is about near its lowest, maybe another year or so more still. I don’t mind renting a house, actually like not worrying about fixing things. BUT, my wife likes the idea of owning, and in the end, so do I.[/quote]

I won’t comment on whether you should or shouldn’t. I may have an opinion, but I’ll assume that my opinion is irrelevant to your decision.

However, I did notice that you cited your inability to sell the house at a profit in the next 10-15 years was the trigger for your self-described strategic default.

If that is, indeed, the case, I’d say that you probably shouldn’t get back into home ownership until there is clear-cut evidence of a sustainable housing recovery. You stated, “To me it looks like the market is about near its lowest, maybe another year or so more still.” I’m curious to know why it is that you feel that way; have you identified any economic indicators that would influence your thinking in that direction? I’m not being smartass here – I really do want to know.

Also, WHY do you and your wife “like the idea of owning”? I understand the whole “wanting my own roof over my head” thing, but there is a genuine risk involved with a transaction like this. If you are troubled enough by the changes in the housing values that you proactively sell a house to avoid the fallout, it would appear that this is something to consider before jumping back in the pool.

A belief that you would be unable to sell for a profit in a decade is what caused you to take a very risky financial step a couple years back (the short sale decision), and that’s not exactly compatible with the whole American Dream thing. Essentially, what I’m saying is that you have to decide what’s important: home ownership or profit (and, what’s more, how much profit). Otherwise, you may well come up against the same issues in a couple years if the market isn’t showing signs of recovery, or not recovering at a pace with which you feel comfortable.

I’m not saying that you shouldn’t be prudent in this decision. Of course, investing money wisely is always a good and important thing. But if you are unable to deal with the economic vagaries of the real estate market (i.e., your overwhelming concern about selling for a profit in 10-15 years was what caused you to short-sell, not financial hardship), housing may not be the place for you to sink a very significant portion of your money.

Best of luck in coming to a decision.[/quote]

We bought in 2003 hoping to own it for about 10 years , and then move up. I was pretty bitter that by the time we had kids and wanted a bigger house in a good school district, we couldn’t sell our house. So, we dumped it onto a bank that was the cause of the mess this country is in now.

We rent now, but while it is nice to not have to worry about maintenance, etc., it is a bit unnerving knowing we could be out on the street if the landlord wanted to.

So, with two young kids, we would like some stability in owning our own house.

Was I really that dumb when I bought my first house in 2003? I didn’t get an exotic loan, had, still have, good income, etc. How many of you knew the market was going to crash in 5 years? Really? Honestly? Maybe a few of you.

I am now a lot more informed about the market , and won’t forget the bubble. My kids will probably not remember, and their generation will make the same mistakes. To answer your question, from what I’ve seen and read, it looks like the market is about at the bottom, plus or minus 5%.

[SellingMyHome]

[quote=dirthead451]You are an idiot in my eyes. You think it’s acceptable to let someone else take the fall for your poor financial sense? You are an idiot and a scumbag.[/quote]

Who took the fall for my strategic default?

[Author]

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