Help re: home payment

[FoolFromAZ]

Your situation isn't similar at all. OP is talking about an investment property, not his primary residence. His is a home that he purchased with the intent of making money but instead he is losing hundreds every month.

You are talking about your own residence. You aren't losing anything. You are building equity. The only way you would lose money is if you were forced to sell while you were still upside down on the loan.

yes not exactly similar. but i too thought about investment when i bought this home. for my family 3 bedroom house is more than enough. If I had gone for that I wud have paid 50K lesser and my monthly payment wud have been around $1400 which is not too high. but I opted for 4 bedroom house and we hardly use two bedrooms. paying atleast $600 more for the home every month which if i had invested in stocks or mutual funds, even in ing cd, I wud have saved lot of money by now. or i wud not have had 45k CC debt now.

[disneysteve]

some of my friends are suggesting me to walk away from this house and buy a cheaper home on my wife's name

We make over 150K but we have over 45K in CC debt, mortgage of $2000 and car payment of nearly $700 with insurance.

Your friends don't sound like the type of folks I'd go to for personal finance advice.

As for the CC debt and car payment, what's that all about? If you are having to charge daily expenses because all of your money is going to support the mortgage, you've got a serious problem. And what kind of car are you driving that is costing you $700/month? Are you upside down on that loan, too, or can you sell the car and get out of that deal?

i too thought about investment when i bought this home. for my family 3 bedroom house is more than enough. If I had gone for that I wud have paid 50K lesser and my monthly payment wud have been around $1400 which is not too high. but I opted for 4 bedroom house and we hardly use two bedrooms. paying atleast $600 more for the home every month which if i had invested in stocks or mutual funds, even in ing cd, I wud have saved lot of money by now. or i wud not have had 45k CC debt now.

That's a whole different story. You bought a house you didn't need in hopes of flipping it for a profit. That isn't investing. That is speculating.

[LivingAlmostLarge]

Technically making $150k and a $2k mortgage, we're around there and it's manageble. I think you aren't managing your money well.

[FoolFromAZ]

Technically making $150k and a $2k mortgage, we're around there and it's manageble. I think you aren't managing your money well.

I am not saying I am having problem paying $2000 every month. Its a terrible feeling when someone buys a house similar to your house size and paying $600 less than what you pay everymonth. i have 45k in cc cos i got 0% apr which I used for my downpayment and also to buy furniture and other stuf I used my cc . anyway i am paying down my cc debt. hoping to finish it off in 12 to 18 months.

i bot new odyssey and only put down $1000, thats why i am paying $700 for car payment and insurance ($160 as my wife is new to driving).

[maat55]

FoolFromAZ,

If I were in your position I would consider the shortsale. You could make a longterm attempt to get out of debt and keep this house, but you have to decide if it is worth it. The younger you are the easier the decission to stay is.

If the house is causing you to take on CC debt, I would sell in a heartbeat. If you like your home and are willing to sacrifice to keep it, you may be able too. But doing what you are doing is not working. 700 for a car payment, is a major stumbling block.

I personally would sell the house and car and payoff the CC debt as quickly as possible. IMO, financial peace is far more important than things. It's not easy for a whole family to agree on such a change, I hope that you can start to stumble in the right direction from here on. Good luck to ya.

[jIM_Ohio]

I dont have plans to move out. I am a software engineer. Currently market is ok here in the phoenix area. but in the future we never know. But we dont have any plans to move out for atleast next 10 yrs. its really a terrible feeling when I see same size house as mine is being sold for nearly 100k less that what I paid for my house. some of my friends are suggesting me to walk away from this house and buy a cheaper home on my wife's name and keep the monthly payment around $1000 which is very much possible at this time. I thought this is the best time to buy for first time buyers.

We make over 150K but we have over 45K in CC debt, mortgage of $2000 and car payment of nearly $700 with insurance.

no plans to move means you have not lost any money.

friends making suggestions to walk away is bad advice. How could you get a loan in wife's name? Any time wife or I applies for a loan (car, house) they check both our credit. Any lender which doesn't is not a lender I would trust.

150k income is not the issue
45k in credit card debt is an issue (what is the interest rate?)
$700 car payment may be an issue (that is same payment I have, but I chose a short 4 year loan on a honda ridgeline). What kind of car?
The cc balance plus new car value is HALF your gross yearly income- that is the issue- more than likely your concern is about cash flow, not losing money on the house.

If you pay off the debt, I think your financial concerns will be mitigated.

[FoolFromAZ]

no plans to move means you have not lost any money.

friends making suggestions to walk away is bad advice. How could you get a loan in wife's name? Any time wife or I applies for a loan (car, house) they check both our credit. Any lender which doesn't is not a lender I would trust.

150k income is not the issue
45k in credit card debt is an issue (what is the interest rate?)
$700 car payment may be an issue (that is same payment I have, but I chose a short 4 year loan on a honda ridgeline). What kind of car?
The cc balance plus new car value is HALF your gross yearly income- that is the issue- more than likely your concern is about cash flow, not losing money on the house.

If you pay off the debt, I think your financial concerns will be mitigated.

intrest rate on credit card is 0% to 6%. but some of 0% offers expiring in 6 months. 35K debt on CC and 10K on my wife's. i have been moving the balance from one card to another and sometimes from my card to my wife's card. thats how i have been managing to keep it under reasonable intrest rate. beginning of the year i had 60k in cc.

yes car payment is killing. i bot a new odyssey 5 months ago. I also drive my 97 camry. insurance for two vehicle comes around $160. $540 for the car payment for 5 yrs.

[FoolFromAZ]

FoolFromAZ,

If I were in your position I would consider the shortsale. You could make a longterm attempt to get out of debt and keep this house, but you have to decide if it is worth it. The younger you are the easier the decission to stay is.

If the house is causing you to take on CC debt, I would sell in a heartbeat. If you like your home and are willing to sacrifice to keep it, you may be able too. But doing what you are doing is not working. 700 for a car payment, is a major stumbling block.

I personally would sell the house and car and payoff the CC debt as quickly as possible. IMO, financial peace is far more important than things. It's not easy for a whole family to agree on such a change, I hope that you can start to stumble in the right direction from here on. Good luck to ya.

this is what my friend suggested.. told me consider short sale or foreclosure. buy a new one on my wife's name or stay in the apartment.
But i really like my home and the community. i have some friends in our community.

i feel, selling my mini van is not a great idea. i currently have 24.5K left in my car loan. if i sell, i wud only get around 20k. anyway i need a reliable vehicle to commute to work. my 97 camry is not reliable any more. if i buy something for 10k. i wud have to make a payment for 10K +4.5K which wud come close to what I am paying right now.

[disneysteve]

I am not saying I am having problem paying $2000 every month.

If you have no cash flow issues, I don't see that this is necessarily a problem. Are you able to pay all of your bills comfortably and meet your savings goals? If so, just keep doing what you are doing?

Could you improve your situation? Sure. You bought too much house and had the misfortune to buy at a market peak. You also absolutely bought too much car. One need not spend $26,000 to get a "reliable vehicle to commute to work". Unless you are running the company carpool, you probably don't need an Odyssey for commuting. Also, you took out too long of a loan, a sign that you were buying beyond your means.

[maat55]

this is what my friend suggested.. told me consider short sale or foreclosure. buy a new one on my wife's name or stay in the apartment.
But i really like my home and the community. i have some friends in our community.

i feel, selling my mini van is not a great idea. i currently have 24.5K left in my car loan. if i sell, i wud only get around 20k. anyway i need a reliable vehicle to commute to work. my 97 camry is not reliable any more. if i buy something for 10k. i wud have to make a payment for 10K +4.5K which wud come close to what I am paying right now.

What would you do if you were running your personal finances as a business? I think your desire to keep your house is emotional as with your car. Which is OK. You have to decide for yourself if the loss in profitability is worth it.

I would have to really be in love with my house to keep it. As you have pointed out, you could raise your net worth by close to 100k within a few months by moving and rebuying(A lot of pro and con factors to consider).

As for the car, you could easily drop your auto debt by 10k to 15k and still drive reliable cars. I drive a 02 Exployer Sport Trac valued at 6100 KBB. My wife drives an 02 PT Cruiser(Both cars have less than 92k and are paid for) we paid 3700 for and we would drive either to CA and back.

My built in reaction to debt is to downsize and rebuild. Your invested in two major assets that have lost and are loosing value. The house can recover, but at a cost to your future net worth. The car is all want.

The fine line between making decissions based on good business thought and emotion, has a huge influence on your financial outcome. Decissions, decissions.

[FoolFromAZ]

If you have no cash flow issues, I don't see that this is necessarily a problem. Are you able to pay all of your bills comfortably and meet your savings goals? If so, just keep doing what you are doing?

Could you improve your situation? Sure. You bought too much house and had the misfortune to buy at a market peak. You also absolutely bought too much car. One need not spend $26,000 to get a "reliable vehicle to commute to work". Unless you are running the company carpool, you probably don't need an Odyssey for commuting. Also, you took out too long of a loan, a sign that you were buying beyond your means.

i get $3500 everymonth after paying all the billing and min payment. i am currently paying down the cc debt, i have brot it down from 60k to 45k in the last 6 months. i dont have any emergency fund. i wud like to get rid of this cc debt first before working on ef.

yes i def bot too much house and too much car, i think i have def made a mistake on that. but now i feel, if i sell either of them, i wud lose lot of money.i may end up paying lot of money everymonth for nothing. to get out of this hole, i feel i shud get rid of cc debt and start building ef. then i think i will be alright.

[maat55]

I think it needs to be said that it is extremely unlikely that a mortgage company will allow you to shortsale without recourse. You would have to prove that you are no longer able to pay your note. That is not the case here.

[disneysteve]

I see no reason to do a short sale on a home when you are not having any difficulty making the payments, whether you could or not.

I think, as I said, that you overbought both home and car, but I also think that you are repaying your debt at the rate of $2,500/month. Keep that up and the credit card debt will be gone in 18 months.

I would, however, start at least a small EF. Stuff happens. Don't know what. Don't know when. But stuff will happen. You need to be prepared. Even if that means delaying your CC repayment by a month or so. I'd say that rather than paying off another $2,500 of debt in September, pay off $1,500 and set aside $1,000 as a starter EF.

[jIM_Ohio]

intrest rate on credit card is 0% to 6%. but some of 0% offers expiring in 6 months. 35K debt on CC and 10K on my wife's. i have been moving the balance from one card to another and sometimes from my card to my wife's card. thats how i have been managing to keep it under reasonable intrest rate. beginning of the year i had 60k in cc.

yes car payment is killing. i bot a new odyssey 5 months ago. I also drive my 97 camry. insurance for two vehicle comes around $160. $540 for the car payment for 5 yrs.

It appears you have the mindset to finance your wants.

the cc debt is financing consumer purchases
the car payment is financing the car
the monthly insurance payment suggests you could not pay once per 6 months.

You need to change this behavior for any financial plan to succeed.

[Scanner]

Hi Steve,

My situation is pretty similar to OP. I am upside down on my house. I bought for about 330K now the similar house is being sold for around 240K. I still have 280K left in my loan. I am currently living in the house. I am paying around $2000 every month towards mortgage payment which include tax and insurance. If I had stayed in the apartment I wud have only paid around 1200 per month for rent. So I am losing nearly 800 every month. this house is on my name. my wife is working and she has good credit score. Should I consider short sale or foreclosure? Will I find any problem with finding a job when i look for it next time if my house is foreclosed?

FOOLFROMAZ:

If you like the community, and you say do, then all of this talk is just "paper talk."

Yes, you have a "paper loss" or even a net negative "paper worth" (upside down) but it doesn't mean a hill of beans until you liquidate the house.

If your job market is okay. . .I would just hunker down in this house and forget what other people are paying. That's what I have told my wife - take a good look. . .we are living here awhile.

Pretty soon, it appears the liquidity situation will be solved so you can look at refinancing later.

That being said, you want to know how you "match" the Jonzez down the street with the cheap mortgage? I would start prepaying your mortgage. In the end, that's how you avoid paying interest.

It's about time, not ARM's and interest rate. That's how you pull yourself out of being "upside down."