flagpole, any advice on this situation

Sell, sell, sell!!!!!!!!!!!

many many other units for sale in that are not selling. a new development company came in and just constructed 8 new units. those are getting traffic, not the foreclosures or other for sale property like the guy across the street that was the second person to move in.

but you suggest I just sell and eat upto $80,000 on a house I paid over $180,000 for?

Hold, Hold, Hold. If you have no problem making your monthly payments and intend to stay where you are, just grin and bear it. Sure, you are paying more for housing than you should be. But, the alternative is worse. If you sell, you will have to come to closing with a check for $80k. Then there will be the transaction costs of getting into a new place (unless you decide to rent). Realtor commissions, inspections, closing costs moving costs, and the inevitable expenses you will incur getting the new place up to snuff (furniture, repairs, paint, etc.). Eventually, the market will turn around. It might take ten years, but it will turn around. People will always want to live in Florida and a big pile of baby boomers are getting ready to head south.

FIagpoIe  wrote:

Sell, sell, sell!!!!!!!!!!!

Boy, what STUPID advice, please don't tell me you know anything about real estate and or finance.

Please talk to a professional in your area that knows market conditions and possible financial solutions. Unfortunately, buying a home without any money down and interest only loan wasn't the best thing. Listening to Flagpole would be your second mistake on this deal.

SELL EVERYTHING! NOW!

i'm guessing that is not really flagpole.

You are in a bit of a pickle, and this pickle is the main reason why I tell people to ALWAYS get a fixed-rate mortgage. But, what's done is done. What to do?

When the rate resets in Nov. 2011, could it reset LOWER than 7.3%? I mean, 7.3% is high right now.

I do NOT like the idea of walking away from it on both moral and financial standpoints. Morally, yes, I think it would be wrong since you CAN pay the mortgage. Why do you need to consider leaving? If it were me, I'd ride this out...so it takes 10 years. By then, hopefully you will have built up some equity (you need to pay MORE than just the interest part of that loan brother). If you foreclose or short sale, it will seriously ding your credit, and you will have trouble getting another loan if you do that.

Can you throw some money at that house so that in 3-4 years you can get it to a point that you COULD refinance if the rates were still attractive? How much is your loan for? Pare your 401k down to 3% to get the match and save money and throw it at the house? You could also use you emergency fund money except for $1,000 of it. If that's not enough to make much of a dent after 4 years of that, then I think you're just stuck.

That was an impostor brother. I wouldn't give that advice.

Hoppy wrote:

FIagpoIe  wrote:

Sell, sell, sell!!!!!!!!!!!

Boy, what STUPID advice, please don't tell me you know anything about real estate and or finance.

Please talk to a professional in your area that knows market conditions and possible financial solutions. Unfortunately, buying a home without any money down and interest only loan wasn't the best thing. Listening to Flagpole would be your second mistake on this deal.

worst possible timing wrote:

many many other units for sale in that are not selling. a new development company came in and just constructed 8 new units. those are getting traffic, not the foreclosures or other for sale property like the guy across the street that was the second person to move in.

but you suggest I just sell and eat upto $80,000 on a house I paid over $180,000 for?

The "Flagpole" in this thread telling you to sell was not me. No, do NOT sell. Hold on to it...throw money at it so that you can build some equity so that you can perhaps refinance one day if you want.

worst possible timing wrote:

I can afford the payments,

Then stay there.

Don't freak out. If you can afford it, stick with it. Even if it seems impossible, it will come back.

You're riding a downwave and it will right itself.

Listen, you bought it for a reason. At some point you thought it was desirable. Enjoy it now and when it comes back, sell or keep it.

I can afford it because I am single and have gotten myself debt free from college loans, ccs and car payments. I followed the good advice of Dave Ramsey to get that way.

I thought I was "winning" and I didn't want to rent a cheap one bedroom during the housing boom when I could "have my own place" in an ever rising market.

I saw them clearing the plot and knew it was a great location for my work. Which it still is.

I was the first one in, and so I paid the highest price of everyone in the neighborhood. They dropped the price from 208k to 188k the week i was closing, they stoped building and left the neighborhood half homes and half dirt lots and they sold cheaper and cheaper.

Most of the people around me have been forclosed on, or have for sale and for rent signs. Nothing is moving. A doctor is selling what was the "model unit" for 100k.

Then along comes a new developer and they start building again and are selling for like $60-80k less than I paid.

Which will happen sooner, the price rebounding 60 to 80k? Or me stopping most of my 401k and saving to put 80k into the house only to get it to a point where I can sell or refinance?

The plan was to hold it for 3-5 years while continuting to save, turn a profit, and buy a single family home as opposed to a townhouse. That is why I did interest only. It is approaching 3 years and this is where I am.

AGain, I can afford it, but it sickens me to see a family walk in and buy the same town house 3 years newer for at least $60k more than I paid.

I could probably rent the townhouse next to me for $400 per month less than I pay right now for mortgage and HOA.

The HOA had a no parking on the street regulation, which isn't enforced and there is barely enough room to drive down the middle of the road when everyone comes home from work.

The neighborhood has changed with new renters coming and going all the time.

What do i need credit for? I pay cash for everything, and I would rather rent until I can pay cash again for a house.

From what I read, banks opperate on business decisions not moral decisions all the time. Would it be so bad if I did the same?

worst possible timing wrote:

From what I read, banks opperate on business decisions not moral decisions all the time. Would it be so bad if I did the same?

No, but I don't think that is the best business decision. You will hose your credit. If you have assets, look out.

I am not worried about the banks, f*** them.

i pay cash for everything, why do i need credit?

and to be clear, I am not trying to be argumentative, I am just trying to explore and weigh options.

worst possible timing wrote:

i pay cash for everything, why do i need credit?

How do you manage to pay cash for everything? Do you pay for expensive items on line using a debit card? That is very risky as you have no recourse if there are problems. Do you use a debit card when you travel abroad? How do you rent a car?

Most companies now run a credit check when you apply for a job. Many companies require you to carry a corporate credit card.

There are so many situations when it is necessary to have good credit that you might not foresee. It is not worth ruining your credit.

worst possible timing wrote:

i pay cash for everything, why do i need credit?

Well, you don't pay cash for EVERYTHING...this home loan is why you're in this bind. You say you were following Dave Ramsey, but you weren't completely or you would have NEVER gotten an interest-only loan.

Just seems you're stuck there for a while...it could be worse...you could have lost your job or gotten another job that wasn't close.

Next time, get a fixed-rate mortgage, and don't buy unless you PLAN to be in the place for 15 years. When you buy planning to be in a place for just 3-5 years, by the time you pay to move stuff out, pay the Realtor's commission, pay to fix it up nice so you can sell it, etc., you can easily LOSE money even if the property has risen in value.

Sorry you're stuck. Sounds like you did a lot of things right, but the big "oops" on the wrong side of the ledger is undercutting all of the smart stuff. Not to beat you up, but there is a lesson here (and as a guy who knows Dave Ramsey, you've no doubt heard it before)--trying to borrow money and ride the inflating bubble so you could cash out later is one of those things that looked really sophisticated not long ago, and now has been exposed as unwise.

I would echo the others here--if there's no hardship, make the payments (and more). You're overpaying relative to the market, but it's what you signed up for. If you didn't know what the other units were selling for, you'd be pretty happy making a payment you can afford for a place close to work. If it really bothers you that badly, make dumping it a high priority for the short term. If the math works out, you could even sell it at a loss, take out a loan for the difference, and make retiring the "stupid tax" debt a separate deal from your living conditions.

Walking away, or "jingle-mail," sounds good in theory, just like it sounded good to buy with no money in the first place. It's one of those unwise things you'll almost certainly regret later. Trashing your credit when you pay cash might seem fine, until your insurance company or someone else pulls a FICO score to assign rates (or even to write you at all). I don't know if Florida is a no-recourse state, but it would really stink to be posting here later and saying, "I didn't know I'd get sued for the difference" the same way you didn't know that you'd be upside-down in a 7% note.

Good luck.

worst possible timing wrote:

i pay cash for everything, why do i need credit?

Insurance (Life, Home, Car, Medical)

Mobile Phone

Cable

Renting ANYTHING at all (car, beach house, mountain house), even just for the week with your family

Gas

Electricity

Companies pull your FICO all the time. If you have shitty credit, it means you are a dishonest person who doesn't pay your debts. Why would a company want to trust you? Why would they want you as their customer?

With regard to insurance, this will mean huge deposits and low-grade policies, if they agree to cover you at all.