Is there a time when foreclosure and bankruptcy is worth it?

[segmond]

Okay, I live in MICHIGAN, and we have been hit hard.

I didn't take out any crazy mortgage, I took out something modest, at 5.85% with 20% of the money down almost 6 yrs ago.

Now here is the annoying thing. For what I owe the mortgage company, I can buy 4 equivalent houses in Detroit or 2-3 in the surburbs.

So, I wonder, is it just better to let the house go into foreclosure, file for bankruptcy. Start over. If I do buy another house out here, I can pay it off in 5 years. If I stick to my currently loan, I have 24 long years to go.

If I do stick here, the neighbourhood where I am is getting bad, it was decent when I got here, but if I get out and go to the surburbs, I am sure it will be okay for the next 10yrs.

If I have a house paid off in 5 yrs, I will have 19yrs advantage to sockin money away in my retirement funds/plan/savings.

At what point does one throw in the towel, say F**K it, and start over again. I am not happy in this house/neighbourhood, not happy that you can buy a house for 1/4th of what I still owe the bank. I can't sell it, I can't even rent it out, and if the auto industry fails this place will be a mess for many long years to come.

Frustrated

[Goldy1]

Yea property values are down, but don't fool yourself into thinking you are going to buy 3 houses in Troy or something for the price of one in Detroit(assume you are in Detroit) .

[segmond]

Yea property values are down, but don't fool yourself into thinking you are going to buy 3 houses in Troy or something for the price of one in Detroit(assume you are in Detroit) .

not in detroit, but southfield and oak park, you can buy houses for $15-$20k. Very good ones with no work for $25k. In detroit, my cousin is buying houses better than my houses for $10k cash out.

[LivingAlmostLarge]

This is a stupid question, but if you walk away from your house how do you qualify for the next purchase?

[simpletron]

This is a stupid question, but if you walk away from your house how do you qualify for the next purchase?

buy the new house before you walk away, then let the bank foreclose on the old house. the problem with walking away is you screw up your credit score and for the next couple of years, you'll have to pay high interest are credit cards(universal default) and loans, assuming you can get them. in addition, low credit score can prevent you from getting a new job, raise rates on auto insurance, and probably many more negatively effects that I can't think of right now.

[jIM_Ohio]

Can you buy one of the others and rent out your current house?

[Goldy1]

I am in TRoy area and while obviously there has been a big growing depreciation, houses in the 2,0000 or less ft range are still getting 180 and up (as far as I see in the real estate papers and online)
What city are you looking to buy at and for what price?
I heard people are gutting these forclosures for everything down to the sinks and knobs and it's causing issues.
It is unfair that you get stuck like that.

[cptacek]

the problem with walking away is you screw up your credit score and for the next couple of years, you'll have to pay high interest are credit cards(universal default) and loans, assuming you can get them. in addition, low credit score can prevent you from getting a new job, raise rates on auto insurance, and probably many more negatively effects that I can't think of right now.

Not to mention the effect it has on your character and soul.

Really, what is wrong with you? Doesn't your good name and character mean anything to you?

Why don't you just burn it down and collect the insurance money?

[segmond]

buy the new house before you walk away, then let the bank foreclose on the old house. the problem with walking away is you screw up your credit score and for the next couple of years, you'll have to pay high interest are credit cards(universal default) and loans, assuming you can get them. in addition, low credit score can prevent you from getting a new job, raise rates on auto insurance, and probably many more negatively effects that I can't think of right now.

i don't plan on ever buying anything i can't afford, and i will never touch credit cards or take auto loans. the only big purchase item i will make will be the next house.

[segmond]

Can you buy one of the others and rent out your current house?

if i could rent it out, i would, but rent is dirt cheap out here! because some people are buying up foreclosure properties for next to nothing and they can afford to rent it out for less than I can, I would have to rent out for $200-$300 less my monthly mortgage just to compete.