REAL ESTATE HELP NEEDED!!: About to Lose House!!

[Ken785]

Can anybody whose an expert in real estate help me?

Ok heres my situation. My parents bought a new house in the middle of 2005 for approx $680,000. They dropped $180,000 as a down payment and are paying approximately 4k a month mortgage. Now they are struggling with bills and such and mortgage is tough to pay...and with the market the way it is now our house is no longer worth 680k its now worth about 400-450k, so as you can see it doesnt make sense to pay 680k on a house thats only work 400k now.

Hence the reason why everyone is foreclosing. Now my question is...my mom is going around telling everyone that she wants to foreclose on this house and rent for 2 years...then buy a house thats cheaper. Shes going around saying that shes going to lose that $180,000 she dropped on the house plus the payments.

I told her she didnt have to lose any money and to just refinance and take back all the equity...she thinks im ignorant and dont know anything or something because she totally ignored me like i didnt know anything about finances. I guess my parents are listening to my uncle...

i heard him yesterday saying to talk to a RE agent or something but i dont want them to get scammed by those sleazeballs neither, my uncle doesnt own a house so i dont think he would be the expert to listen to on Real Estate finances.

Can anyone help me? I dont want my family to lose over $200,000k over their lack of financial knowledge. Is it possible to get all the money back that we put in AND THEN foreclose? Please help brothers.

 

[SmoothTalker]

Of course its not possible. Who would give you that money dude?

Refinancing would mean you get a new loan. Odds are the would only give you some amount less than the CURRENT value of the property since the mortgage industry isn't looking to take on too much risk at the moment. So you would take the new loan and use that money to pay off your old loan, but since the new loan is less, you're going to have to cover the difference with your own money, therefore losing it.

The ONLY way to get your money back is if you hang on long enough for house prices to turn around, and wait until they get above what you paid for it and then sell.

People refinanced when prices were soaring because it gave them extra cash. For example you bought a house for 500k and got a 400k mortgage. 2 years later the house is worth 600 k, so you go to the bank and they are willing to loan you more money with the house as collateral, so you can take out a mortgage of 550 k, pay off your old mortgage, and keep the extra cash.

That's a simplified version of your credit boom. Then you take that 50k in cash and spend it on an SUV and other crap that stimulates the economy.

The problem is that there is no real growth, nothing is produced. Its financial wizardry and now reality's knocking. All those high flying RE 'investors' are suddenly in DEEP debt and don't look all that smart anymore.

 

[theunflushables]

Granted I'm no real estate agent, but lets say they've put roughly 325,000 into the house (180k + 4k x 36months). Selling the house at 400k to 450k would pay off what is left on the house plus some profit.

Foreclosure on the other hand the 325k is gone, they lose the house, don't make money off of it, and it hurts their credit.

Refinancing won't really help, it just delays the situation.

Best thing they could do is see how much they can get compared to how much they owe. If they can get more than what they owe deffinetly sell. Hell, even if its 10k less than what they owe, its better than losing all the money that they've sunk into the house and ruining their credit.

 

[SmoothTalker]

Well that's not exactly profit even if they sell for more than the remaining loan since they've been paying into it for years. But yeah given the option if you can sell for enough to cover the loan then it would make absolutely no sense to foreclose instead of just selling.

 

[theunflushables]

Yeah, like I said, I'm not a real estate genius. lol. I meant to say they would walk away debt free and possibly some cash in hand.

 

[Alle_Gory]

Sell the house for a good price. Higher than you bought it.

 

[theunflushables]

Sell the house for a good price. Higher than you bought it.

With the current economic troubles and the troubles in the housing market there is no way that they would be able to sell the house for as much as they bought it for, no one wants that kind of risk.

 

[Bible_Belt]

Basically, if I read it correctly, they spent $180K to get to a position where they owe $500K on a $450K house. The money is already lost, but it's not the end of the world.

If she wants to keep the house, then talk to a mortgage broker about refinancing to an interest-only mortgage. That will drop the payments. It is a short-term fix, as the principal amount owed on the house will not go down over time, but it can get you through hard times until the real estate market improves.

 

[Poonani Maker]

I'm so glad I rent for a paltry $463 a month for years on end. I have no worries during this "Crisis." I'm building from the ground up. Just bought me a new bed. One step at a time. My place, while in the pour house will be fixed up to show the tail and eat it before long. I can't wait until my place becomes a revolving door for women. I'm setting myself up for life-long bachelordom.

 

[WORKEROUTER]

Can anybody whose an expert in real estate help me?

Ok heres my situation. My parents bought a new house in the middle of 2005 for approx $680,000. They dropped $180,000 as a down payment and are paying approximately 4k a month mortgage. Now they are struggling with bills and such and mortgage is tough to pay...and with the market the way it is now our house is no longer worth 680k its now worth about 400-450k, so as you can see it doesnt make sense to pay 680k on a house thats only work 400k now.

Hence the reason why everyone is foreclosing. Now my question is...my mom is going around telling everyone that she wants to foreclose on this house and rent for 2 years...then buy a house thats cheaper. Shes going around saying that shes going to lose that $180,000 she dropped on the house plus the payments.

I told her she didnt have to lose any money and to just refinance and take back all the equity...she thinks im ignorant and dont know anything or something because she totally ignored me like i didnt know anything about finances. I guess my parents are listening to my uncle...

i heard him yesterday saying to talk to a RE agent or something but i dont want them to get scammed by those sleazeballs neither, my uncle doesnt own a house so i dont think he would be the expert to listen to on Real Estate finances.

Can anyone help me? I dont want my family to lose over $200,000k over their lack of financial knowledge. Is it possible to get all the money back that we put in AND THEN foreclose? Please help brothers.

Send me a message and we can discuss a way to get yourself out of this situation. At least we could get your family out without destroying their redit.

 

[Alle_Gory]

Best of luck.

 

[CGE333]

Unless they want to continue paying on a house that is worth way less, just walk away. No one will refi them out of this mess. Live there without making payments for as long as you can and then move out right before the foreclosure date.

PS: be sure to tell them they are welcome as the rest of us will indirectly pay for this mess through higher interest rates and taxes (taxes are if/when the gov has to bail out this lender due to many people getting foreclosed on).

 

[WORKEROUTER]

Unless they want to continue paying on a house that is worth way less, just walk away. No one will refi them out of this mess. Live there without making payments for as long as you can and then move out right before the foreclosure date.

PS: be sure to tell them they are welcome as the rest of us will indirectly pay for this mess through higher interest rates and taxes (taxes are if/when the gov has to bail out this lender due to many people getting foreclosed on).

This is terrible advice. By ignoring the situation they will completely f*ck up their credit. There are plenty of investors who could potentially work with the bank directly and avoid this.

 

[CGE333]

Yes they will f*ck up their credit. But I am guessing they owe around $500K and it is now worth $400K. How many investors do you know that will give them $500K for a house worth a hundred grand less. Also, most banks will only give 80% on one loan, so $320K on a house worth four hundred grand. And the days of doing silent seconds, etc.. are long gone. Oh and one other thing is I'm guessing the market there has not bottomed out so this house could still lose another $50K or more in value.

The only chance they have of not defaulting on the loan is to try and negotitate with their lender. The only other options depending on how tight money is would be to get a second job, rent out a room, etc. and try and keep making the payments.

If they are going to let it go back, they may as well let it go back now, before they put even more $ into it. And the sooner they default the sooner they will start building back their credit.

 

[sm.thomas83]

Can anybody whose an expert in real estate help me?

Ok heres my situation. My parents bought a new house in the middle of 2005 for approx $680,000. They dropped $180,000 as a down payment and are paying approximately 4k a month mortgage. Now they are struggling with bills and such and mortgage is tough to pay...and with the market the way it is now our house is no longer worth 680k its now worth about 400-450k, so as you can see it doesnt make sense to pay 680k on a house thats only work 400k now.

Hence the reason why everyone is foreclosing. Now my question is...my mom is going around telling everyone that she wants to foreclose on this house and rent for 2 years...then buy a house thats cheaper. Shes going around saying that shes going to lose that $180,000 she dropped on the house plus the payments.

I told her she didnt have to lose any money and to just refinance and take back all the equity...she thinks im ignorant and dont know anything or something because she totally ignored me like i didnt know anything about finances. I guess my parents are listening to my uncle...

i heard him yesterday saying to talk to a RE agent or something but i dont want them to get scammed by those sleazeballs neither, my uncle doesnt own a house so i dont think he would be the expert to listen to on Real Estate finances.

Can anyone help me? I dont want my family to lose over $200,000k over their lack of financial knowledge. Is it possible to get all the money back that we put in AND THEN foreclose? Please help brothers.

I would suggest hiring well experienced real estate agent.

He will guide you to make a right decision.

 

[Rollo Tomassi]

This is terrible advice. By ignoring the situation they will completely f*ck up their credit. There are plenty of investors who could potentially work with the bank directly and avoid this.

I hate to say it, but this sh!t's horrible in Florida. I bought my home in 2005 for $315K, I knew this was investor overpricing, but we'd just transferred our company HQ here and this was the peak of the housing market. I put a $10K hot tub in and a $7K fence around it for my dogs. I put $15K down, and yes, I bought it from an investor. So that's $32K invested plus I've payed down the principle about $12K so I've got $44K into the house. Assuming I could sell it with all the new builds in the area, and as nice as it is, this home wouldn't appraise for more than $260K in the current market (and that's with the upgrades) so tack another $28K onto the total investiture for $72K. This is what I'm upside down on my own house for.

It gets worse. Since property tax in Florida is based upon the initial appraisement $315K in 2005 that's what my property tax percentage is assessed on each year. I pay close to $5K per year in property tax, plus about $600 for the HOA.

Now fortunately I had the foresight to get a 30 year fixed on this property and I make enough money afford it, but every year I wait, saving becomes harder and harder. Even if I wait it out another 2 years and pay it down enough to where I might be able to sell it, I'm still out $72K. So the temptation (and the more rational thinking) becomes voluntary foreclosure. Walk away from the property (maybe sell the hot tub first) and rent an identical home in the same development for less than half my current mortgage. Any new income tax I pay as a result I cancel in property tax and the HOA fees as this is the owners cost. In the time it takes for the bank to foreclose I'm living rent free and saving about a $2500 mortgage every month. If it takes 6 months for foreclosure I've recouped $15K, and then I go to paying about half that in rent saving myself another $1200 per month.

So within the first year I (optimistically) recoup $22K of my initial investment. The next year I recover $14,400, etc. So while foreclosure may destroy my credit for 5 years (remember, foreclosure isn't bankruptcy), what will take longer - the housing market to rebound to the point where I can break even on an already bloated home price OR my ability to save even more by renting (or down-buying) in that time? So people in this situation are betting that the economy and the housing market will take longer to rebound than it will to clear their credit history.

Now, all that said, I have no plans to foreclose, I'm more than able to weather this financially, but tell me why I shouldn't?

 

[Bible_Belt]

So while foreclosure may destroy my credit for 5 years

I think it's more like five months. Anyone with income has credit, just on less favorable terms. Bankruptcy is not that big of a deal, either. A person has more credit six months after a foreclosure if they freed up cash flow that they did not have before. People think credit is defined by their credit score, but if all of your money is going to pay debt, then your debt ratios are maxed out and you already have effectively no credit at all, regardless of a good-looking credit report and numerical score.

 

[Francisco d'Anconia]

I'm so glad I rent for a paltry $463 a month for years on end. I have no worries during this "Crisis."

Psssttt... Do you realize that a good portion of the people who are going into foreclosure are real estate investors who purchased rental properties including apartment buildings? When they go into foreclosure the Sherriff gives all of the tenants eviction notices.

Just something to be aware of....

 

[ketostix]

Anyone with income has credit, just on less favorable terms. Bankruptcy is not that big of a deal, either. A person has more credit six months after a foreclosure if they freed up cash flow that they did not have before.

I don't get why so many people think Bankruptcy is so bad either. A lot of times like you said you are in a better credit situation right after the Bankruptcy. Plus lenders know you can't file for it again for some time. Of course, Bush tightened up the requirements for who can get a banjruptcy, just before the financial people moved to ream everyone a good one. All in all I see the financial system as basically a scheme where they play with figures to rip off one group and transfer the wealth to another.

 

[unamean]

well as a mortgage broker for the past five years i can tell you that theres no way you can refinance. you have two options.
a. you can try to get a short sale, meaning that the bank will accept a lower payoff so that you can try to sell.
b. do a loan modification. your lender does not want to foreclose. it costs them way too much money. 85% of banks have a loss midigation department where they will negotiate lower terms and make a payment more affordable so that you can save the house.

in either cases you need an attorney to get anywhere with these banks. pm me for more info as that is what i do, now that the mortgage market sucks.