More people are losing their homes

[Ima saver]

Re: More people are losing their homes

I bought my first house in 1966 for $13,000 , added a room and a pool for a grand total of $19,000. In 1974 we sold the house for $40,000 and built a new home for cash. when we moved in 1984, we sold that house and built a home on the river for cash. In 1995, we sold again and paid cash for the house we are in. The house is appraised at about $500,000 on the tax rolls. The point I am making is that we started small with something we could afford and after that just built with the money we had . Of course, it helps a lot if your husband is a builder. His labor was free . He built our house at night and on weekends, while building other people's houses.

[lrjohnson]

Re: More people are losing their homes

Right now it makes sense for me to pay my $400 galf share of rent and throw a ton of money in savings, then to buy houses the way some friends and coworkers did. I may not be building equity, but I can save for a huge downpayment, I don't have to worry about a mortgage I can't afford, and I don't have to worry about becoming "upside down" with prices going down. I was regretting being a renter, but I fell good about it now. (I live in CA, and that makes a big difference. I'd probably buy most other places.)

[Snoopy2645]

Re: More people are losing their homes

I am with IMA when I first bought though it was a trailer I sometimes wish I had kept it & just bought land to put it on but I was only 22 when I bought this house I didnt want to live in the country at the time now 8yrs later I sure do anywho I sold that & bought this house crossing my fingers it will be soon paid of we dont have much more to pay then I am hoping to sale it & buy something bigger & newer & that will be it we will stay thier the next house will be a keeper for awhile at least. Tell the kids are gone I dont know maybe I will have grandkids someday & will still need a big house!!


So many people I knew went from no where to live meaning they lived with parents or whatever to buying homes & they lost them very quickly because they knew nothing about taxes & ins & upkeep & I did thanks to my trailer!!!

[tgavin71]

Re: More people are losing their homes

Same is happenning here as well. I know this is going to be cruel but quite frankly I have little sympathy for people who buy whooping huge houses that they couldn't afford and when interest rates rise .25% they have to sell because the repayments are beyond their means. I understand that illness, job loss etc can be the result of some foreclosures but by and by it is simply not being able to afford it in the first place.

[MoneyHoney]

Re: More people are losing their homes

Part of the problem is the high number of sub-prime mortgages and zero-down mortgages out there. The mentality of many mortgage companies has been "let's do whatever it takes to get you into a house".

[disneysteve]

Re: More people are losing their homes

Part of the problem is the high number of sub-prime mortgages and zero-down mortgages out there. The mentality of many mortgage companies has been "let's do whatever it takes to get you into a house".

That is a HUGE part of the problem. Last year, 43% of new mortgages were interest-only. That's insane. Now many of those were speculators, buying homes with the intent of holding for a short time then reselling. But that only works when prices are rising. If prices flatten out, or fall, it can be disastrous. Many "investors" were taking huge gambles and I'm quite sure many of them didn't get out in time.

[rob62521]

Re: More people are losing their homes

Anyone can fall into trouble due to illness or job loss, but it's those people who buy more house than they can afford that are ridiculous. They don't plan ahead and figure they will find a way when they need to. I noticed a credit union is now advertising balloon notes -- said it was new to them. I remember working with a gal years ago that they would get a balloon note on a big house and then right before it came due would sell it and get another balloon note for another big house.

[disneysteve]

Re: More people are losing their homes

I remember working with a gal years ago that they would get a balloon note on a big house and then right before it came due would sell it and get another balloon note for another big house.

I'm always amazed by schemes like this. All it takes is one drop in the market or trouble selling one house and the whole house of cards comes collapsing down.

My mom's house has been on the market since June and has been under contract twice, both deals fell through. She is signing a third contract today. Fortunately, she has no mortgage. But if she had an ARM or interest-only loan or balloon payment, she'd be in big trouble.

[BCHGRL]

Re: More people are losing their homes

No one is considering how ridiculous the housing market is. The house next door to mine was purchased in 2002 at $110K. At the peak of the market last year, she could've sold it for $240K. She waited to long and put it on the market right when it started to tank. She has reduced her price to $190K. The market is considered "rock bottom" but my neighbor can still make $80K (less carrying costs) on the sale of a home that she has owned less than 5 years. Even though it might be painful for her now, she will still come out ahead just because she bought prior to 2005.

Last year, people were scrambling to buy homes while they could still afford them. I understand because we bought in 2005, and I was afraid with home prices rising 20% per month that DH and I would be priced out of the market. Now, no one is in the market because we were all rushed into buying a home out of fear. Fortunately, we were able to obtain a low fixed rate. However, a tax increase just raised our mortgage payment by $157 per month.

If greedy property owners didn't drive up the price in 2005 and scare potential buyers into homeownership too soon, the hefty percentage of foreclosures would not exist and the percentage of home sales would remain steady.

[rob62521]

Re: More people are losing their homes

I'm always amazed by schemes like this. All it takes is one drop in the market or trouble selling one house and the whole house of cards comes collapsing down.

It always worked out for them, guess some people have all the luck! I know if I had tried it, I would have had problems.

[laceshawl]

Re: More people are losing their homes

I have also observed the tendency for people who've been in houses awhile and have built up some equity, to take out a line of credit when the value of their home rises. They might be able to swing the regular mortage payment, but add the extra costs of money borrowed for improvements, or often just to finance lifestyle choices or pay off other debt, and they are in big trouble when circumstances change. In particular, I have seen people get a consolidation loan to pay off their CCs, then run the cards back up again. Now they have both the HELOC and the consumer debt. It would be interesting to know how much other debt these people who lose their homes have.

[disneysteve]

Re: More people are losing their homes

I have seen people get a consolidation loan to pay off their CCs, then run the cards back up again. Now they have both the HELOC and the consumer debt.

The stats I've seen say that 2/3 of all homeowners who take out a home equity loan/line to pay off consumer debt proceed to rack up more debt, so, as you pointed out, they end up in far worse shape than they started.

In recent years, a great many homeowners were using their home equity as their personal ATM. But now the stuff is hitting the fan as these people try to sell homes that are now worth less than what they owe.

[rob62521]

Re: More people are losing their homes

In recent years, a great many homeowners were using their home equity as their personal ATM. But now the stuff is hitting the fan as these people try to sell homes that are now worth less than what they owe.

How incredibly depressing...homes worth less than they owe. Ouch!

[shengmei]

Re: More people are losing their homes

I think the main reason houses are being forclosed is more and more unwed couples are purchasing houses together. Without the tight bond of marriage relationships can dissolve more easily. It happened to an acquanitance of mine.

If two people buy a house and one person moves out, suddenly the one whose name is on the mortage application has to pay the monthly mortage bill in its entirety. That is a heavy burden for any young person.

[lrjohnson]

Re: More people are losing their homes

I think the main reason houses are being forclosed is more and more unwed couples are purchasing houses together. Without the tight bond of marriage relationships can dissolve more easily. It happened to an acquanitance of mine.

Do you have any stats to back this up? Every person I know in house trouble is half of a married couple. This doesn't mean I think marriage leads to debt problems. I don't think our anectdotal experiences count as evidence here.