Why did I buy a house in 2006? Am I a complete and total idiot?

You are not an idiot. Pretty much everyone got fooled even though I bet most had doubts like you did. Just look at what happened to Lehman and other big names. Once again, there was a lot of thinking that "this time it's different" just like the dot-com bubble of the late 90's and probably all previous bubbles after the original bubble. (What was the original bubble, by the way???)

A piece of advice on real estate that I also learned the not so easy way: an agent's job is not to advise you on the investment aspect of a home purchase. He/she is supposed to find you a home that matches the criteria you outline and help make the deal go through at a price you indicate you are willing to pay. (I'm sure agents here can add to or correct that.) This is their livelihood and they want to make money just like everyone else and so they won't say "hold off the purchase for now and come back to me in 2 years when the prices are much lower because this bubble just can't be sustained".

If you can afford to wait it out you should. What else were you going to do with that money? Put it in the stock market? While I understand kicking yourself over the thought that you could buy it much cheaper now think long term. Do you think warren buffet is kicking himself for investing in goldman sachs at around 115/share (yes I know he got fat dividends, but still losing money here). Housing will rebound, you might not see 250,000 again, but at least you'll sell and make some money back.

"Worth" is subjective and only matters if you plan to sell.

Why would you be selling a house you bought 2 years ago, anyway?

Never buy a house if you don't plan to stay at least 5-7 years.

Rent it out for a while. No one wants to buy these days anyway so there should be a market for it. Let them pay your mortgage while you build up your equity and are waiting for the market to rebound some.

I'm lucky to have a renter but I am only getting $1100 per month in rent and my expenses are $1100 mortgage plus $300 taxes plus $380 maintenance plus $100 special assessment = $1880 per month! When I bought it, the maintenance was only $270 and there was no special assessment. ouch.

So, this place is costing me $780 per month and I'm not building equity because it's interest-only for 10 years. That's why I want to sell it. But for $140k, it's smarter to keep it a rental.

You bought a house with a mortgage that is interest-only for ten years? You obviously planned on the value of the house increasing. You were a speculator and got badly burned just like millions of other investors did. You might consider letting it go or talk the bank into a short sale etc etc. Is this a condo or townhouse? Why the $1200 a year special assessment for a single family home?

Yep you're an idiot. 20% down on a 10yr interest only loan when rates for a 30yr fixed weren't much higher.

Way to through money away.

So, your actual subject should be "Why did I buy a house in 2006 with a short-term interest only loan? Am I a complete and total idiot?"

If you were buying it as a place to live and you felt 250k was a fair price, then who cares what it is worth now, you have a place to live and you are paying what you agreed. But, since your later posts indicate you were basically trying to make money on the housing market, not buy a place to live; yes, you are a total idiot. Or at least a guy who wanted to make easy money and had bad timing.

If you don't care about your credit rating, walk away and let the bank foreclose. You can lose 50k now or 70-80k over the next eight years and still be underwater on your mortgage with no equity. Just make sure you have a non-recourse mortgage.

Otherwise, your only hope is refinancing. You must get out from under that 10 interest only loan. You may have some luck if your credit is really good. Any fixed interest rate is better than interest only.

You guys pegged me wrong here. I wasn't an investor, and this was my primary residence. I got the interest-only because it featured lower monthly payments for 10 years - not a lower interest rate. The house was desirable because I have a kid in school, and it was the best school. So that's the best part of the deal - my kid is in a very good school. But man, I thought the value would at least hold steady and not totally collapse.

I did plan to stay in the house for more than 5 years, but fewer than 10. The best-laid plans of mice and men....

Push it Down! wrote: Why the $1200 a year special assessment for a single family home?

Just fall behind on your payments and the new socialist leaders will bail out out.

Did you at least put solar panels on your house?

In that case, what's the problem? You plan on living in this place for at least 3 more years, possibly 8 more according to your >5 but < 10 year plan. So, you have a good place to live. At some point you thought 250,000 was a fair price for that good a place to live. Perhaps in 8 years it will be around there again, or more. But as long as you don't have to sell now- you don't have real losses, just potential. So what am I missing?

This is a pretty good example of just what was going on everywhere at the time.

You were in the market for a house and that was what it took at the time to own a house with your budget (nice to have $50K to put down). Since prices kept going up it seemed like it was wrong to wait because it would just get more expensive and you were missing out on potential equity gains by sitting on the sidelines.

Knowing what you know now you should have rented the last 2-3 years. And all of us that owned homes should have sold them and rented them back or moved to a rental for the last 2-3 years.

People that bought homes in 2004 with interest only mortgages and sold them in 2006 were geniuses.

People that bought those homes in 2006 and are trying to sell them in 2008 got caught with the hot potato.

Foreclosing may be the cheapest way out if you are that negative on cash flow. Foreclosing in this situation may not affect your ability to borrow in the future as much as it would have in the past.

There are many many people in your situation.

The country is pretty F'ed right now.

Karl Marx wrote:

Just fall behind on your payments and the new socialist leaders will bail out out.

It's funny you mention that because this is exactly what people are recommending to me. In all seriousness. I know people who are deliberately falling behind on payments now that there are economic incentives to do so. I refuse to do this.

To answer someone's question, "what's the problem?" - The problem I have is only due to change of circumstances - moving into my new wife's house. Now I don't need my old house as a primary residence anymore. I'm not a flipper, just someone stuck with an extra house that is a horrible "investment" now.

Yup ... we bought in 2006 as well, and since then have had to relocate because of our jobs. We are stuck with a house we can't sell and are renting for less than half of our mortgage ... it sucks. We are just hoping we can hang on and see what happens. I am not sure that falling behind on payments (unless you have to) is the best advice. I believe it will hurt you in the future, and if you can afford to pay you should. At least that is what I keep telling myself, mainly because I don't think it is right to forclose if you don't have to, it only hurts the economy more.

Ah, gotcha- sorry I missed that the first go-round.

Live in your home, make your money at work.

Don't worry about your home's value.