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I have a fair amount of friends/relatives that sold houses in the past 5 years that had to write checks to the bank for $5,000 to $15,000 after living at their houses for years. I only know about it because they reached out to me to ask if there was another way. (Some didn't like the short sale option when I described it, others loved it) I came away from these conversations with a couple conclusions: 1) People don't talk about the deals where they lose money. They are somewhat embarrassed or just want to move on. 2) Almost no one knows how to correctly calculate the rate of return on their housing investment. 3) Despite the points above, it really isn't that risky to buy a house with 5% down if you are willing to live with a loan default on your credit history. Amazingly, the friends who did the short sale had no problem rebuilding their credit history. Even the people that were foreclosed on did fine. As long as you make a decent income, you can get credit.
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Dec 24, 2015 15:42
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I think bankruptcy/foreclosure is worse in people's imagination than in reality when in a strategic default scenario. As long as you have a reference for a rental and don't have any huge expenses coming up you can survive a while with poo poo credit. I've heard horror stories about bringing +$50k to closing and I can't imagine doing that. Obviously it's a different story if it's not a strategic and the bank comes to evict you and your family.
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Dec 24, 2015 16:07
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fknlo posted:I doubt I'd be looking to buy right away, but in my cursory searches, prices don't seem to be that bad. They're obviously not as low as KC, but I've found plenty of decent looking places for under $300k. Also obviously not quite what I can get here in KC for the same kind of money. To be fair, a lot of what I'm seeing are hideous houses from the late 60's/70's that haven't been updated at all. Is there the same issue with all cash offers that there is in other places? That's the kind of poo poo that would absolutely keep me out of a house. Specific to Longmont, stereotypical places under $300k either are in a bad neighborhood (something you can't tell just from looking at a listing unless you have a feel for the area), have serious structural problems, happened to have a major road or highway on the other-side of the backyard fence, or are just missing general amenities like a garage. Also places are being bid up. One place I was interested in was listed at 319, sold for 341. A co-worker's place he bought was list for 300 and sold around 330. I paid asking, but would have likely paid less in a "sane" market. You can probably find cheaper out in Firestone or Erie/Dacano, but you'll probably be paying for it in the commute. Erie has issues with fracking, so I just avoided it since its such a minefield of good and bad areas. I'm not specifically sure what you are referring to with "all cash offers" issues. The market moves. Although not strictly required, having an agent that can get you listings within an hour of them being posted is very valuable. Open house showings are rare, so an agent will help there as well. Places are typically listed on Thursday or Friday, and have offers by Monday. The bullshit "auction" listings where all offers must be in by a certain day, and the highest wins is still prevalent. Yes, you can buy with financing. I'm doing it, and a couple of co-workers have in the past few months.
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Dec 24, 2015 22:13
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Brigdh posted:Specific to Longmont, stereotypical places under $300k either are in a bad neighborhood (something you can't tell just from looking at a listing unless you have a feel for the area) All good advice, but I'll add that the Denver metro area doesn't really have "bad neighborhoods," or at least in the sense of a lot of other major cities. I would be floored if Longmont had any place that caused you to lift an eyebrow. (Unless you just mean kind if crappy, as opposed to dangerous or crime ridden)
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Dec 25, 2015 00:46
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From a sellers perspective who is working through an agent, what is the process for evaluating bids? I was bored so I drilled pretty deep into researching assessments and subsequently the owners of a house I'm interested in. Turn outs the guy is nearing retirement age, owns a successful business and has several properties. This particular baby has been listed for 4 months with gradual price decreases and is fully cleared of all belongings. I'd say a motivated and sensible man looking to divest... Does a seller set up certain criteria with the agent that the agent used to filter through bids? Is each bid evaluated by the actual seller or is that mostly the agent picking best value? I don't really think I'm in any position to haggle with this information (it is definitely a sellers market around here) but I'm just curious...
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Dec 27, 2015 06:11
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It's not that complicated, usually they are making sure the buyer has financing lined up and then it boils down to a dollar amount. Things get hairy with multiple offers and they usually start to negotiate for terms that give the buyer fewer outs or quicker closings.
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Dec 27, 2015 06:55
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We closed on our house about 6 weeks ago. Friday night when we were out of town, we had high winds that knocked down four sections (30ish feet) of our fence and another 50ish feet is leaning over and I can't get it to stay upright. Noticed that most of the fence that is messed up looks rotted and needs to be replaced. No idea what this will cost to fix myself. Merry Christmas. Do. Never. Buy.
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Dec 28, 2015 01:26
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antiga posted:I think bankruptcy/foreclosure is worse in people's imagination than in reality when in a strategic default scenario. As long as you have a reference for a rental and don't have any huge expenses coming up you can survive a while with poo poo credit. I've heard horror stories about bringing +$50k to closing and I can't imagine doing that. I brought around 35k to closing. Bought my condo for 143k in 2009, sold it for 92.5k in 2015. It sucks but with income over six figures, I would never be able to declare bankruptcy (especially as I had no credit card debt) and I probably will be buying again in only 3.5 years (so about 4 years after selling). Since at best I'd be eating over a quarter of the loss on a 1099, it just wasn't worth the risk of a deficiency judgment, etc. Never buy (unless you're really, really sure). Nail Rat fucked around with this message at 15:27 on Dec 28, 2015 |
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Dec 28, 2015 15:25
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Nail Rat posted:I brought around 35k to closing. Bought my condo for 143k in 2009, sold it for 92.5k in 2015. It sucks but with income over six figures, I would never be able to declare bankruptcy (especially as I had no credit card debt) and I probably will be buying again in only 3.5 years (so about 4 years after selling). Since at best I'd be eating over a quarter of the loss on a 1099, it just wasn't worth the risk of a deficiency judgment, etc. My understanding is that bk isn't required for a strategic default - you just mail the keys to the bank and walk away and eventually they foreclose on the empty house. Obviously this will badly damage your credit rating and might impact your ability to get a mortgage for the next 7 years, but it can be economically rational if you are severely underwater. If you have the income to support it that's great and likely worth it but when people talk about taking a 401k withdrawal to avoid a credit hit I think that is too much.
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Dec 28, 2015 17:29
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In a recourse state you are still on the hook for the difference unless your bank is some not for profit or something that doesn't garnish all your money.
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Dec 28, 2015 18:32
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Elephanthead posted:In a recourse state you are still on the hook for the difference unless your bank is some not for profit or something that doesn't garnish all your money. Exactly. As I'm in a recourse state, the best case scenario would be still needing to pay about 30% on the difference owed versus auction. It just didn't make sense to strategic default to (possibly) save 15k after all is said and done(since they add fees, etc. to the balance of the loan as the foreclosure process goes on). After it sold at auction, they would send me a 1099 for the difference (I believe this is the case even in non-recourse states; the forgiven debt is considered income). It's entirely possible you could send up owing more in taxes than it would have cost to pay off the loan, since you don't know what it will sell for at auction, and the loan balance will be inflated by legal fees, etc. by some unknowable amount. Just mailing them the keys isn't how simple it is in recourse states, also, there's a much more involved, pain in the rear end process usually, which involves needing to be in the home but avoiding being served foreclosure notice in person (as if you are served in person and not by publication, they can get a deficiency judgment against you; otherwise, they can only 1099 you for the forgiven debt). Believe me, I considered and weighed my options for years before just deciding to cut my losses. Nail Rat fucked around with this message at 19:42 on Dec 28, 2015 |
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Dec 28, 2015 19:33
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You're right. Good on you for doing the research and do never buy.
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Dec 28, 2015 21:48
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Nail Rat posted:I brought around 35k to closing. Bought my condo for 143k in 2009, sold it for 92.5k in 2015. It sucks but with income over six figures, I would never be able to declare bankruptcy (especially as I had no credit card debt) and I probably will be buying again in only 3.5 years (so about 4 years after selling). Since at best I'd be eating over a quarter of the loss on a 1099, it just wasn't worth the risk of a deficiency judgment, etc. I bought a condo in the Denver area in 2008 for the same amount ($148K) and closed on selling it last month for $242K. I'm actually regretting selling it a bit because even though it had been rented out prices are appreciating so fast that even if it sat empty the value is going up by about double the mortgage payment every month, maybe more. Of course past results are no guarantee of the future and you never know, but still. I'm not trying to gloat just pointing out yet again how insane Colorado has been, you generally see zero or even negative growth in condo prices as a rule, even in bubbley markets. Also do sometimes buy because occasionally it works out I guess?
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Dec 29, 2015 01:14
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Nail Rat posted:Exactly. As I'm in a recourse state, the best case scenario would be still needing to pay about 30% on the difference owed versus auction. It just didn't make sense to strategic default to (possibly) save 15k after all is said and done(since they add fees, etc. to the balance of the loan as the foreclosure process goes on). After it sold at auction, they would send me a 1099 for the difference (I believe this is the case even in non-recourse states; the forgiven debt is considered income). It's entirely possible you could send up owing more in taxes than it would have cost to pay off the loan, since you don't know what it will sell for at auction, and the loan balance will be inflated by legal fees, etc. by some unknowable amount. We considered all of our options and went for the strategic default/bankruptcy route. Essentially we bought in July 07 at the peak of the bubble at 157k for a small but great 40's era bungalow. Our area was hit hard when the bubble burst and everyone who was buying and restoring the gorgeous older homes in our neighborhood started to flee. Our home was broken into multiple times in broad daylight. My breaking point was sheilding my 2 year old while a cop pulled some sort of rifle out of his trunk during a call we made about hearing gunshots fired from a car that was just then circling back by. We rented a new place, defaulted and declared bankruptcy as a strategic measure. The house sold for 16.5k at the foreclosure auction. I may get enough confidence to buy again. Our credit has recovered, things are OK for us but I am still a bit gun shy. Pun intended. Roxy Rouge fucked around with this message at 05:54 on Dec 29, 2015 |
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Dec 29, 2015 05:51
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Roxy Rouge posted:We considered all of our options and went for the strategic default/bankruptcy route. Essentially we bought in July 07 at the peak of the bubble at 157k for a small but great 40's era bungalow. Our area was hit hard when the bubble burst and everyone who was buying and restoring the gorgeous older homes in our neighborhood started to flee. Our home was broken into multiple times in broad daylight. Do you have any resources that you would recommend for people interested in pursuing default or short sales?
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Dec 30, 2015 16:10
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Managed to buy a fixer upper for ~$125 per sqft in an area that's between $175 and $225 per sqft. Should hopefully be able to do everything we want to do (refinish floors, new windows, new roof, unenclose front porch, new back patio roof, kitchen remodel, bathroom remodel, some new electrical, landscape, expand garage) and keep it under $160 per sqft. The nice thing is that it only needs like $10k worth of work to be livable, everything else is optional. On the downside we closed Dec 8th and will be moving Sunday in the cold.
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Dec 30, 2015 16:47
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We finally closed a few weeks ago and my move was in the worst storm of the season. It was awesome. On the upside, we are finally getting the house clean enough that we can stand it and we (hopefully) will be able to communicate less often with our lenders. It was a short sale (that went on for four months) and we got it for well under what it appraised for. It needs TLC, but nothing we can't handle.
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Dec 30, 2015 21:02
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Hashtag Banterzone posted:On the downside we closed Dec 8th and will be moving Sunday in the cold. I'll take moving in the cold over moving in sweltering heat 10 out of 10 times, so it could be worse!
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Dec 30, 2015 21:29
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My wife refinanced her condo a couple of years ago, before we married. I was adding it into Quicken and ran into something weird: the monthly payment we make, and that's on the GFE I dug out of our files, doesn't match what online payment calculators say it should be. It's off by $0.07 per month. Is there something I'm missing that goes into the calculation besides initial loan amount, term, and interest rate? Obviously not a big deal, but I really expect it to be correct to the penny.
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Dec 30, 2015 21:42
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Somebody calculating their mortgage payment being too high by 7 cents a month is the most BFC post of all time, that made me smile.
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Dec 30, 2015 22:08
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Probably just a rounding error
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Dec 30, 2015 22:14
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smackfu posted:My wife refinanced her condo a couple of years ago, before we married. I was adding it into Quicken and ran into something weird: the monthly payment we make, and that's on the GFE I dug out of our files, doesn't match what online payment calculators say it should be. It's off by $0.07 per month. Seven cents? It's probably the compounding period. If your bank calculates interest (say) daily and applies it monthly, it's going to be very slightly different than if they do both monthly, or something like that.
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Dec 30, 2015 22:53
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Someone's clearly pulling off what they were trying to do in Office Space, and laughing on a beach with YOUR seven cents!
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Dec 30, 2015 23:19
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baquerd posted:Do you have any resources that you would recommend for people interested in pursuing default or short sales? We just contacted a few local bankruptcy attorneys and selected one after the consults. We had no luck working with our lender for a short sale (due to the low value vs the loan amount) but generally your lender would be the place to start. There is also an arrangement with the lender called deed in lieu of foreclosure but again our lender wasn't interested. I did have a friend who went that route and it involved a ton of paperwork and aggravation but was.not as hard on her credit score as the default route.
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Dec 31, 2015 02:48
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I had to listen to no less than three people tell me how rent was throwing money away. This from relatives who've been living in their houses for 20+ years and apparently are still like 20 more years from paying them off because they can't stop refinancing.
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Dec 31, 2015 04:12
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oRenj9 posted:I had to listen to no less than three people tell me how rent was throwing money away. This from relatives who've been living in their houses for 20+ years and apparently are still like 20 more years from paying them off because they can't stop refinancing. Yeah, well, I figure in the 5 years we lived in the house we spent about 100k in mortgage, insurance, closing costs and tax plus another 15k in home improvements (materials only, we did the work) to end up over 100k underwater on our house so....yeah. I'm renting right now.
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Dec 31, 2015 04:28
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oRenj9 posted:I had to listen to no less than three people tell me how rent was throwing money away. This from relatives who've been living in their houses for 20+ years and apparently are still like 20 more years from paying them off because they can't stop refinancing. Just because they still have leverage on their house doesn't mean they aren't better off than renting. Basically, they've gotten banks to buy a part of their house again and again. I'd be extremely surprised if they hadn't gotten plenty out of the house's appreciating value over a 20 year window, particularly given the extended period of low rates we are in. That being said people who say renting is throwing money away are idiots. Paying off your mortgage is a part of the American Dream sure, but that's for idiots too. Whole lotta stupid to go around.
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Dec 31, 2015 05:00
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Bozart posted:Just because they still have leverage on their house doesn't mean they aren't better off than renting. Basically, they've gotten banks to buy a part of their house again and again. I'd be extremely surprised if they hadn't gotten plenty out of the house's appreciating value over a 20 year window, particularly given the extended period of low rates we are in. Oh, I wasn't saying they'd be better off renting, just that I definitely am better off renting. The thing is, I keep telling them that I move a lot because I job-hop, so it's useless for me to buy then have to sell in a few years. Her response was, 'then you can upgrade!' According to Zillow, they bought it in 95 for $79,990 and it's now worth about $110-115k. That's like <2% annual growth, I'm not sure if that qualifies as 'plenty' or not.
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Dec 31, 2015 05:59
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I'm kind of in a conundrum about whether to sell or refinance my house. Lived in it for nearly 12 years and am that amount of time into a 30 year mortgage. Unfortunately we were on an ARM which has reached it's maximum APR rate and my monthly mortgage payment is almost $1700, though being almost halfway through the mortgage over $500 goes towards the principle every month. If I refinance the agent I spoke with estimated my monthly payment would drop to $1200 fixed 30, almost $500 a month in savings, though I'd be restarting the amortization from the beginning again. The house was built in 2004, first and only homeowner of it, it was constructed by a well-regarded builder and I've had no problems in the almost dozen years I've lived here so I'm not expecting my roof to cave in or anything any month now and hit me with an unexpectedly large expense. I owe around $184k on it and if I were to sell it I think I'd get around $290 to 300k. My parents live with me and are in their mid 70's and in gradually declining health. My brother, who has a masters in business and is one of the most financially saavy people I know, recommends I sell the place, pocket however much I get from it (probably around 80-100k I'd imagine after the real estate agents cuts) and just rent, so my parents can enjoy the extra money we'd have on hand in their golden years. Thing is, my parents have no real desire to use the money to travel or anything, their content being homebodies and playing with their grandchildren when they have the chance, so the extra money wouldn't be of much use in that regard. About the only thing it might be used for is if my mother's dementia takes a drastic turn for the worse and I have to hire a caregiver for her but that's pretty worst-case scenario thinking. So they're not gonna be jetsetting to the Bahamas or what have you. And we already have a modest rainy day fund set aside if something bad comes up. I've lived in this house almost as long as my childhood home and am kind of loathe to leave it, I do take a lot of pride in it being "my house". If I go through with the refinance to $1200 a month it will make it within the realm of affordability for me when I become sole breadwinner, as the current almost $1700 a month we're paying right now is only sustainable because my father is still working but I don't want to have to continue to count on that going forward.
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Dec 31, 2015 08:41
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Ragnarok the Red posted:I'm kind of in a conundrum about whether to sell or refinance my house. It sounds like you want to stay in the house, and there's nothing bad about resetting the amortization schedule. If you want to pay off the house in 18 years just pay principle extra each month. You didn't post your payment breakdown, interest rate or the cost of doing a refi, but it's likely that refinancing would save you a lot of money just going off of the numbers you posted.
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Dec 31, 2015 13:09
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Sounds like the numbers work out ok either way, so what do you really want to do?
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Dec 31, 2015 17:44
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Yeah, you can refinance to a $1200/month payment and keep paying $1700 a month until your father can't contribute any more, and then lower your payment to whatever you can pay yourself. Paying extra towards the principle early on goes a long way to saving you that extra interest you'd have been paying by resetting to 30 years. (Just don't do the thing where instead of paying the principle, they assume extra money is to be saved and applied to next month's bill.)
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Dec 31, 2015 19:15
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If you don't really have any motivation to sell, do the numbers work out for you on a shorter term? Certainly you can always pay extra on a longer term loan to cut in to the amortization, but in your case a shorter term might be preferable (if the payment works based on the lower attainable rates). Didn't catch the last line about affordability. If you feel like despite whatever you have going on in the nest egg wouldn't keep you in a comfortable place payment wise, it makes sense to go with the longer term and pay down the balance as necessary. gtkor fucked around with this message at 19:45 on Dec 31, 2015 |
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Dec 31, 2015 19:37
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Also, I think if you sell the house for a profit and don't use that money to buy another house, you'd have to pay long-term capital gains taxes on the money, right?
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Dec 31, 2015 20:08
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Leperflesh posted:Also, I think if you sell the house for a profit and don't use that money to buy another house, you'd have to pay long-term capital gains taxes on the money, right? If it's your primary residence, you can keep up to $250,000 ($500,000 if you're married) tax-free, regardless of whether you buy a new home or not. Above that, or for second homes or investment property, yes.
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Dec 31, 2015 20:14
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Whelp, owned the new house for less than a month and the upstairs bathtub just drained through a downstairs light fixture. Do never buy.
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Jan 2, 2016 02:46
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King Burgundy posted:Whelp, owned the new house for less than a month and the upstairs bathtub just drained through a downstairs light fixture. Better than opening your electric panel to be greeted by a small waterfall pouring out from behind the breakers. Whee, home ownership 
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Jan 2, 2016 04:47
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Sanity check, please. It's totally not stupid to want to stay in our cheap condo that we're renting instead of buying a house in the rapidly inflating Seattle market, right? I feel like everyone is pressuring us to buy, and property values are increasing between 7 and 15% every year. Just had a bunch of family taking us that we need to be building equity, and we also got the whole "throwing away money on rent" BS. Like... This madness isn't sustainable, right? The worry is that if we don't buy now, we'll lose our chance to get in the market. The utterly ridiculous Seattle market, where any house on sale for over three days has a severe structural problem.
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Jan 2, 2016 10:25
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Tell me if this is a good idea or a dumb idea. The house my husband and I are renting is being sold out from under us this summer. We'd planned on staying here for at least two and a half more years until we were both out of Graduate school however now we're being told the place will be sold and we'll have to move. I am not sure I can express how lovely it is to move where I live. Usually you're forced to move out a week or two before you're allowed to move in to a new place and finding a location to store all your stuff is a pain in the rear end. It's essentially like moving twice and it's always 95 degrees and miserable. I really, really don't want to do that poo poo again. My parents posed the idea that they were considering simply buying the property (as it'll be cheap as hell since cosmetically it needs some assistance) as a rental property. We would pay rent to them and when we wanted to move out there would be no issue. Now they're suggesting that it might even be a better idea for us to purchase the house ourselves. My parents would provide the down payment and we could just pay off the mortgage every month which would be several hundred dollars cheaper than what we'd been paying in rent. After we both graduate and take jobs elsewhere, my parents said they would buy the property from us and use it as a rental. This way we can build some credit and will look like more responsible adults when it comes time to buy a house we plan to stay in for a long while. The benefits are that this place should be cheap as hell (under $105k), we've lived here for 6 months and nothing truly crazy has happened and we know about the areas of the house we think are problem areas, we know a trustworthy guy who does home inspections and would inspect this place, we wouldn't have to move, and we wouldn't have to worry about running into problems when it comes time to sell. The negatives are that houses are scary and bad things could happen (but hopefully home insurance would help). Thoughts?
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Jan 2, 2016 14:33
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Drunk Tomato posted:ridiculous Seattle market JibbaJabberwocky posted:Tell me if this is a good idea or a dumb idea.
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Jan 2, 2016 16:01
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