home as an investment

[Goldy1]

I am copying this from an article I just read on cnn money website about how obama's foreclosure help won't help everyone.
We Won't be Helped by the Housing Fix - Yahoo! Real Estate

"Take Joe Martinez of Bristow, Va., who fits the profile of the "responsible" homeowner Obama cited in the plan. The government contractor and his wife thought they did everything right when they bought their brand new $600,000 house two years ago. They put 5% down and got a 30-year fixed-rate mortgage they could afford.

Others in their neighborhood, however, couldn't keep up with the payments. As foreclosure rose, the value of the couple's home plummeted to $450,000, leaving them doubtful they'd ever recover their investment.

Martinez called their lender to try to get into the Hope for Homeowners program, which would reduce their loan balance to 90% of the home's current value. But they were turned down because they weren't in default.

So two months ago, the couple stopped paying their mortgage, hoping they could then qualify. But even if they don't, they are willing to take the hit on their credit scores to stop throwing money down the drain.

"There's just no point to stay here," said Martinez, 29, adding he could rent the house across the street for half his monthly mortgage payment. "We don't want to give up our home, but it's never going to come back."

My thoughts=this is the problem. It must really be horrible to owe more on your home than it is worth. I can' t even imagine. I just feel these people are saying "my INVESTMENT (like a home is a stock) didn't pay off so I am bailing.

[Ima saver]

5% down was not a smart idea. Neither was buying a $600,000 house when you are still in your 20's. I bought a modest house in my 20's and had it paid off in my early 30's. It is very relaxing to know that I can probably never be homeless. As long as I can pay my taxes, I will be ok!

[banditfist]

They are more than 5% underwater on their house, so Obama's plan will do nothing.

I take issue with several things:
1) A home is NOT an investment. It is a place to live. Since historically home prices have barely been above the rate of inflation, they can at best be referred to as a store of value.
2) They did not do everything right. If they had put down 20%, then we can talk. At least banks are now getting back to normal/responsible lending practices. This and this only is what will stabilize home prices.

Obama's plan is a ton of crap. People with ARMs and more than 5% underwater are ineligible. Since most are more than that, the plan is not going to help.

[Ima saver]

I agree, banditfist!!

[jIM_Ohio]

anyone expecting government to fix their problems IS the problem.

[tripods68]

they should contact You Walk Away - Foreclosure Protection Plan and Kit, Foreclosure Assistance, Mortgage Loan Modification, Debt Consolidation, Credit Repair from Foreclosures for help.

[Goldy1]

"you walk away" lol...sorry that just made me laugh. I am not making light of it, but it sounds like a cheesy infomercial.

My thoughts exactly. 600K home? They may have been riding on hope of cashing in in a few years.

I have known people who wanted to make money buying and selling(afte rliving in a home a few or less years) and I used to wonder if and how that would work.
I hate the hassle of moving. I hate risk..ok for the most part! lol

[Rainelli]

I think Obama move's might not accomodate everyone but atleast he make some effort in helping those who are in deeper situation.

[Snave]

I think Obama move's might not accomodate everyone but atleast he make some effort in helping those who are in deeper situation.

Those in deeper need will not be able to afford the new payments in a few years. I am sorry, but there is a high probability an adjusted rate won't help. The next time there is any turbulance, we will see the same thing. People need to take accountability for themselves. Not everyone should own a home. That is why there are apartments (and roommates).

My gripe is those that did everything right are the only ones that should be complaining... those that saved and bought a home they could afford and live below their means are the ones who are penalized the most.

If you were a greedy banker, you earned some nice bonuses along the way. If you bought a home you couldn't afford with nothing down and some exotic mortgage, you are going to get bailed out (even if you don't get bailed out, you got to live in a house you couldn't afford for quite a while, so at least that's something). Those that plodded along, earned their income, saved for their future, and lived below their means are the ones that should be mad.

[wincrasher]

These people are stupid.

They are not in financial need, yet they are willing to wreck their good credit? They finance something 30 years, and only look at the return over a couple years?

Home can be a good investment, but the return on investment is no longer 2-3 years. Moving up every couple of years is a thing of the past, most likely.

I wish I could have bought such a nice home when I was only 29. When I bought my home at age 23, it was the most I could afford, but I expected to live there for many years, if not for the rest of my life. A "moveup" house was something that was more of a dream down the road if you got the promotions, raises, etc.

They need to shut up and keep making their payments!

Lots of people (and their children) are on the edge of being out in the street with nothing - I'm tired of hearing about what piddling help they are getting from the govt. being unfair. It's unseemly to want to cash in on help you don't need. Whatever they are handing out is not much - the writedowns the banks will have to make is tens of thousands per home to make a difference.

Your "help" or "share" of this stimulus or whatever you want to call is if it stabilizes your property values. I for one, would be grateful for that alone.