San Diego Housing Market News and Analysis
New: When does it make financial sense to dump my house?
User Forum Topic
Submitted by SellingMyHome on November 20, 2009 - 12:17pm
I have read many posts here, and admit that I still have a lot to learn. Thanks for the many answers to questions folks post here.
23109VC started a post earlier asking about his situation. I appreciate the honest answers. But, his situation is different than mine, so I'd like to feel you out. By the way, I am the one that responded to the Battiata bashing post. I have listed with him already, and have an offer already, and they have submitted the package to the bank. I've yet to see how they deal with other buyer's agents, I'll still let you know how my experience goes...
Bought a house in Lakeside (92040 zip) in 2003 for a little over $400,000. Since then in 2006 or so, I did a refi with about $15,000 cash out (all of which went in to fixing up the house, not for new BMW's). So, that means we have a recourse loan. Actually got out of an 80/20 in 2005, then refi'd in 2006. Closing costs were always rolled in, so total owed got higher! Can you believe the banks do that? My house actually appraised for over $600K during my last refi!
We currently owe about $450K, can get about $350K after realtor fees. That means we are hoping for a $100K forgiveness.
Current mortgage and Property tax add up to $3,300/month. Total household income is about $120K, and I estimate we save about $900 month with the interest deductions, so would need to rent for less than $2,300 to make it work. We could easily find a place for less than that that suites our needs.
Why do we want out? Like 23109VC, we need a bigger place, and hate to see houses going so cheaply. We could easily buy a bigger and newer house for the same as we owe, or a little more. Also, a neighbor recently converted their house into a nursing home. This has upset my wife a lot! We're not sure if it will just be the infirm elderly, or worse, halfway house type folks.
Can we afford what we have? Yes, but with two kids under four, we have saved absolutley nothing in the last four years, and have actually been dipping further into our credit cards. I have a great pension at work, and wife contributes to her 401K. Sadly though, we have no savings in case of emergency.
SO, my questions is: Is it financially smart to get out, rent, wait out the hit to the credit for the short sale, and buy in a few years? Should be able to save enough for a 10% down then. Also, will have more money each month with higher income, school loan paid off, and one less car payment.
This is purely a financial question. What are the potential downsides to my particular situation? Will our current lender even accept a short sale? Will they want me to pay something back?
Feel free to ask clarifying questions.
~Active forum topics~