General Discussion
Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsJust got my appraisal back for the re-fi, value of the property is 40% what it was 5 years ago
Far western Chicago suburbs. What's funny (in a not-so-ha-ha way) is that we did major work (with the savings from that first re-fi) and put in more than $100k worth of work on the house, painted all of the barns and transformed one of the storage spaces into a working student apartment just 4 years ago. In other words, we've put in a ton of work and $$ on improvements which hasn't helped it's value at all....
Down 25% from what we were appraised at 20 years ago when we bought it when it was a wreck (which meant we did even more work at that time, everywhere: all the barns needed re-roofing, re-wiring, re-plumbing PLUS we re-did all the water lines AND built a NEW 5 stall barn.... something like $250k worth of work right after we bought it).
We're not underwater and have no intention of selling this place, maybe never if my kids decide to hang onto the farm after we go, so I'm not too fussed. We qualified for the re-financing which is the important part to me but a 60% drop in value in 5 years is pretty hefty for just about anyone, especially in light of the massive amount of work we've put into this place over the past 20 years.
How are people hanging on, at all?
stopbush
(24,376 posts)We rent now.
Can't see myself ever investing in a home again, even though we have plenty of money saved for a down payment once our credit recovers from the short sale.
riderinthestorm
(23,272 posts)Fresh_Start
(11,330 posts)Many of people who aren't underwater were harmed by the real estate bubble created by the mortgage lenders.
There is no one working to help us recover from the harm.
I know that people are hurting worse than us, but it galls me that I paid more than I should have because BofA and WellsFargo were manipulating the market.
I lost my downpayment and am barely above market.
Meanwhile BofA got 80K of my money and no one was punished.
russspeakeasy
(6,539 posts)A lot of people aren't hanging on. They are walking away, waiting for a foreclosure, moving in with their kids, etc.
One of my kids owns a farm just north of you and has seen his appraised value drop by 45% in 3 years. They, like you, are not planning to move, so for now, it's a paper loss.
The poor (no pun intended) people who can't hang on are victims of the financial services industry and may never recover.
riderinthestorm
(23,272 posts)Your kids too with a 45% decrease.
Intellectually I know its only a paper loss, and we're here til the end, but if I had to move to take another job - I'd bolt in a minute if I were that deeply underwater.
It really hits home when you get substantial documentation on YOUR own place! You think you are immune and probably YOUR place is just that special, maybe a teensy drop in value but no way is it one of "those....".
And then it is! Wowza....
Wellstone ruled
(34,661 posts)Really sucks doesn't it. Still have 10-20% of all homes in our area to go thru foreclosure yet. Back to 2000 prices. Down the road in Vegas,you can buy whole blocks of homes for what one house sold for in 2000. No wonder Harry Reid catches crap. Every house here in town is over appraised by 25% for taxes. Teabaggers run the place,explains things,huh.
riderinthestorm
(23,272 posts)K8-EEE
(15,667 posts)During the BushCo era I would get phone calls every day saying our little cottage in L.A. "qualified" for outrageous home equity cash outs....at one point they were appraising it on paper at $700,000 WHICH WAS CRAZY this is a little 2 br house. Home values in Los Angeles are never really LOW so now it's down to about $475,000 or about twice what we paid for it, which seems about right to me.
What I'm saying is that maybe the problem isn't sinking home values but the fact that they were artificially inflated by The Evil Ones, in order for the banks to end up owning them after bleeding the owners dry with their new "products."
TO ADD ON EDIT: I also thought at the time that the inflated home values were a way of making the economy look "booming" while all the jobs were moving out....look how property-rich everyone is all the sudden! THE PEOPLE WHO DID THIS KNEW IT WOULD CRASH....that was part of it, IMO.
riderinthestorm
(23,272 posts)We only took out a substantial chunk of equity once - 5 years ago when we had to do (another 5 year balloon) commercial re-fi. We used the money to make the house we'd been renting into something pretty liveable, and to do some other overdue repairs. Nothing crazy and the principal was still well below what we paid.
I finally hooked up with a farm service and we're getting into a 30 year fixed mortgage - finally! but there's no way I'm pulling out any extra this time. I'm terrified values are going to drop even further!!
The Backlash Cometh
(41,358 posts)It's just crazy. We're in the middle of one and every room in the house has been photographed and every penny deposited in the last thirty days had to be explained. They might expect us to get a letter from the person or source where the checks came from, and we're getting a mortgage from the bank's affiliate! It's just crazy.
Are there any consumer advocates if things go south unexpectedly for no good reason?
riderinthestorm
(23,272 posts)Love, love them so far. Its actually a farm co-op that will be holding the mortgage. We'd been hostages of a whole slew of bank buyouts - Wachovia, BOA, National City, now PNC, Nobody ever helped us really try to figure out how to take this farm mortgage and transform it into something other than a commercial mortgage.
Our balloon was coming due again in July and we started the process (again) but with interest rates this low I was pissed when their rate offer wasn't much lower than what we already had. So I went on a real search for an alternative.
We submitted the docs they wanted and have just been waiting for the appraisal (which has taken the longest). The people have been outstanding. I'm really satisfied. Of course we haven't closed yet but so far, so good. (fingers crossed) They've already said we're approved so now we just have to set the date for the closing.
The Backlash Cometh
(41,358 posts)They always have one more thing they want from us. They even wanted our 401K and IRA information! We refused to go that far because our loan amount is well below what we're asking for in cash out. They would make a tidy sum even in this depressed economy if we had to walk away.
riderinthestorm
(23,272 posts)Our loan amount is similarly under what they'd get, even at the low appraisal but I'd jump through any hoop right now to ensure we locked in a 30 year fixed instead of a commercial loan again....
tammywammy
(26,582 posts)I did it through the company that already held my mortgage. I just provided the financials and it was easy peasy. The only money I had to explain was my check from Chesapeake when they renewed the option on the lease for my mineral rights. I had to just write a letter and put in a copy of my mineral rights contract. No biggie really.
I have to say my mortgage company was great. They answered all my questions, I went down a full 2% on my interest rate and my appraisal came in at what I was expecting. The home values here are steady.
The Backlash Cometh
(41,358 posts)But I'm glad others are having a good experience.
Kellerfeller
(397 posts)since I don't want to sound judgmental but if you've had the property 20 years , why the re-fi?
I can see refi-ing within a few years of the original loan but after so many years, you are into the time frame where your payment actually goes to the principal instead of just paying interest (that's the stage I'm in with my mortgage and it drives me nuts to pay so much and see so little go to the principal).
By refi-ing, aren't you setting yourself up to be paying interest for a long time all over again? Is there something I don't understand where it can be advantageous to re-fi at that point??
riderinthestorm
(23,272 posts)So we've been forced into doing commercial loans every 5 years. It's a major drag BUT, it has helped along the way because the interest rates have always gone down every time this came up. We've always just applied the "extra" savings $$ towards the principal (which is why we're not underwater even with the property value at 60% less).
Although we've gone to the same bank building all these years, it's changed owners - now it's PNC so this was our first experience dealing with them really. So I asked them about trying to convert this into a 30 yr fixed. No way they told me. But with the rates this low, I was determined to see if there was another way. I called our local farm bureau who put me onto this Farm Credit Services Bureau who will write a 30 year fixed! The rate is lower (again, yay!) and now I don't have to worry that we're going to get stuck with a much higher rate 5 years down the road....
I was just really shocked at the appraisal value - a 60% drop in value within 5 years is amazing to me. While we're "rural", I'm actually less than 2 miles from the major highway into Chicago, and 5 minutes to the commuter station into Chicago. I can see why a LOT of people are just walking away.
Kellerfeller
(397 posts)That makes a lot more sense.