Bought a house for 560k in 2007

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Sunshine22
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Bought a house for 560k in 2007

Post by Sunshine22 » Sat Dec 24, 2016 12:13 pm

Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .

bubbadog
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Re: Bought a house for 560k in 2007

Post by bubbadog » Sat Dec 24, 2016 1:54 pm

Sell the house, take your loss, and move on. Being an out of state landlord is not likely to make things better. I can certainly understand your hesitancy in not wanting to take a loss.

Minty
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Re: Bought a house for 560k in 2007

Post by Minty » Sat Dec 24, 2016 2:04 pm

bubbadog wrote:Sell the house, take your loss, and move on.

+1.
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dm200
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Re: Bought a house for 560k in 2007

Post by dm200 » Sat Dec 24, 2016 2:05 pm

Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


I am making no recommendation one way or the other (I see possible advantages each way), but right now you have already lost your "equity". An important issue (in my opinion) is what will your mortgage payment be when the 10 years interest only is up? Since your balance is $450K, I assume you have paid down the principal (somehow).

squirm
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Re: Bought a house for 560k in 2007

Post by squirm » Sat Dec 24, 2016 3:16 pm

Is this in CA? You might get a HARP on it.

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sat Dec 24, 2016 3:39 pm

No this was in NJ

squirm
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Re: Bought a house for 560k in 2007

Post by squirm » Sat Dec 24, 2016 3:54 pm

I believe it's still ongoing:

https://www.harp.gov/

JGoneRiding
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Re: Bought a house for 560k in 2007

Post by JGoneRiding » Sat Dec 24, 2016 3:59 pm

squirm wrote:I believe it's still ongoing:

https://www.harp.gov/


I believe you have to be owner occupied to qualify

Does rent cover costs? If so you can continue to wait if not you are already paying out the equity just in smaller pieces. Do you really havenothing in savings. Not even retirement? That seems the bigger problem

Stonebr
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Re: Bought a house for 560k in 2007

Post by Stonebr » Sat Dec 24, 2016 4:03 pm

Sunshine22 wrote:Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity.


You don't have any equity. The market price is the market price, and that alone determines whether or not you have equity. I think you should sell.
"have more than thou showest, | speak less than thou knowest" -- The Fool in King Lear

CppCoder
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Re: Bought a house for 560k in 2007

Post by CppCoder » Sat Dec 24, 2016 4:14 pm

bubbadog wrote:Sell the house, take your loss, and move on.

Maybe +1. If your renter is 100% covering your costs on the house (mortgage, taxes, maintenance, etc.), maybe you should hang onto it. If it's cash flow neutral, you're finally reaching the point where the mortgage will start paying the principal, and essentially, your renter is building your equity. If you ever lose that renter, though, I'd sell it, take your loss, and move on.

Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


I don't want to be too presumptuous, but I think you may also have a spending problem that this board might be able to help you address. I have a more expensive house (in a high property tax state), I have a stay at home wife, and I have two small kids. I don't know your exact situation, but, unless there are extenuating circumstances, I have a general ballpark idea. You should have been able to save a good chunk of money on a $200k salary, and you should be able to a least save some on a $130k salary. Something else is wrong here; maybe it's your spending.

Carefreeap
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Re: Bought a house for 560k in 2007

Post by Carefreeap » Sat Dec 24, 2016 4:20 pm

JGoneRiding wrote:
squirm wrote:I believe it's still ongoing:

https://www.harp.gov/


I believe you have to be owner occupied to qualify

Does rent cover costs? If so you can continue to wait if not you are already paying out the equity just in smaller pieces. Do you really havenothing in savings. Not even retirement? That seems the bigger problem


I got a HARP refi on a rental property in 2013. The program rules may have changed since then but the OP might want to call his/her lender to see if there is a non O-O HARP available.

But my loan was owned by Fannie or Freddie. Did Fannie or Freddie make 10 year interest-only loans?

One thing the OP needs to check is what happens after the interest-only term is up? Is the loan balance going to amortize over the remaining 20 years? If so, that could be some serious payment shock.

Dieharder
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Re: Bought a house for 560k in 2007

Post by Dieharder » Sat Dec 24, 2016 4:59 pm

CppCoder wrote:
Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


I don't want to be too presumptuous, but I think you may also have a spending problem that this board might be able to help you address. I have a more expensive house (in a high property tax state), I have a stay at home wife, and I have two small kids. I don't know your exact situation, but, unless there are extenuating circumstances, I have a general ballpark idea. You should have been able to save a good chunk of money on a $200k salary, and you should be able to a least save some on a $130k salary. Something else is wrong here; maybe it's your spending.


+1 200K income and no savings even with HCOL doesn't sound right. You should have at least put 10% in your 401k assuming you had one, and an employer match on top of it (assuming there was one), or some other form of retirement savings. May be you did, and it is not clear if the no savings part is in excess of this.

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OAG
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Re: Bought a house for 560k in 2007

Post by OAG » Sat Dec 24, 2016 5:02 pm

Anybody notice this was a 10 year interest only loan taken out in 2007. To me it looks like he will face foreclosure in 2017 if he cannot pay off the loan in a very short period of time.

Should sell quickly - frankly should already have sold as he is facing a possible distress sale in about a maximum of one year.
OAG=Old Army Guy. Retired CW4 USA (US Army) in 1979.

inbox788
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Re: Bought a house for 560k in 2007

Post by inbox788 » Sat Dec 24, 2016 5:10 pm

Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


Don't be an accidental landlord. Are you current renting? Do you plan to buy another home soon?

How much rent do you collect each month? How much is the mortgage each month? PITI? What are the terms of the loan (interest rate, months remaining)? What happens when 10 years is up? Does it automatically amortize or do you need to get a new loan? Who manages the property and gets new tenants? Manages maintenance and repairs? How did you attain the current renters? Is there a lease?

CppCoder
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Re: Bought a house for 560k in 2007

Post by CppCoder » Sat Dec 24, 2016 5:18 pm

OAG wrote:Anybody notice this was a 10 year interest only loan taken out in 2007. To me it looks like he will face foreclosure in 2017 if he cannot pay off the loan in a very short period of time.

Should sell quickly - frankly should already have sold as he is facing a possible distress sale in about a maximum of one year.


I never looked at the mechanics of an interest only loan until I read your statement because I never personally considered one. I didn't realize that the payment ballooned when the interest only period expired. Obviously, that makes sense. The mathematics must work that way.

Given the above, I withdraw my statement that it might make sense to keep the renter to pay the mortgage. I see no path to this house not turning into a money pit. Sell soon and move on from this mistake.

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Re: Bought a house for 560k in 2007

Post by Valuethinker » Sat Dec 24, 2016 5:27 pm

Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


Most places US housing prices have rallied sharply. The outlook is for slower increases, against a background of higher interest rates. Your best port of call on this is Bill McBride's exceptional Calculated Risk blog-- it's worth spending some time reading that and links to house price forecasts. He called both the housing crash *and* the bottom and upwards.

Property taxes and maintenance costs, particularly in a state like New Jersey, are significant expenses.

I think this is what economists call a "Sunk Cost". What you paid for it is irrelevant. It's what happens going forward that matters- -what return you can expect from now.

Having ridden the downturn and the recovery, it's not likely going forward it will be a great investment (unless there is fundamentally something about the neighborhood that means it is going up in the world-- new job opportunities, new transport links, better schools). Hopefully you can sell it and repay the mortgage without having to put more money into it.

Nate79
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Re: Bought a house for 560k in 2007

Post by Nate79 » Sat Dec 24, 2016 5:54 pm

You bought a house that you could not and still can not afford. Sell it and move on. You may lose the initial equity but you were living in a house with interest only payments - basically renting. This type of loan should have allowed you to save the money you were not paying in principle if you could afford the house in the first place.

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sat Dec 24, 2016 8:50 pm

I am in the process of ref. the house and if that happens than some money will go towards mortgage and I found this renter own my own and has been renting since I moved.I was a software consultant for 6-8 years and the billing rate that I used to get translated into a 200k cask per year.My wife doesn't work and I have two kids out of which one will be ready for a college soon.After my project ended I was home for an year looking for jobs and nothing worked out.Eventually I got a fulltime position in Atlanta paying 130k and had no choice but to start te job and rent the house.I always made a salary of 110k-120k and I have been in US for past 20 years.My finances worked out very well until I bought this house and I started consulting at the same time.My kids were little so has to pay for their preschool and all.I had to buy health ins for family since had no benefits and I had a long drive to work.My mortgage payment is 3000 per month and adding all other expenses I could save some but when I stayed home for an year my savings went away .Right now I have may be 40k in cash and I want to buy a small house around 300k on Atlanta for my family but my wife doesn't want to stay here as she finds it too hot to live.She wants to go back to NJ and insists me to get a job there but I have only been in this position for 3 years and don't feel it's a right time to leave the company.I may not find another job soon that too in NJ though I have 20 years of an exp working in US.

ryman554
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Re: Bought a house for 560k in 2007

Post by ryman554 » Sat Dec 24, 2016 8:58 pm

Dieharder wrote:
CppCoder wrote:
Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.I was making close to 200k when I initially bought the house and since my wife wasn't working and with two kids my expenses were high and I couldn't save anything.I lost my job in 2014 and found another paying 130k in another state.I rented out my original home to someone to cover the mortgage and I am living on rent where I work.I have nothing in savings and still owe $450k on that house.Sometimes I think of selling that house but it's selling for 500k and in that case I will lose my equity .I need a financial advise for my difficult situation .


I don't want to be too presumptuous, but I think you may also have a spending problem that this board might be able to help you address. I have a more expensive house (in a high property tax state), I have a stay at home wife, and I have two small kids. I don't know your exact situation, but, unless there are extenuating circumstances, I have a general ballpark idea. You should have been able to save a good chunk of money on a $200k salary, and you should be able to a least save some on a $130k salary. Something else is wrong here; maybe it's your spending.


+1 200K income and no savings even with HCOL doesn't sound right. You should have at least put 10% in your 401k assuming you had one, and an employer match on top of it (assuming there was one), or some other form of retirement savings. May be you did, and it is not clear if the no savings part is in excess of this.


+2. With 200k income, I suspect one can save about 60k (18k 401(k), 6k HSA, 11k IRA, ~25k after-tax) assuming California with a $3k housing expense (~600k 30 year mortgage) and 10% state taxes and not scrimp too terribly.

At 130k, taxes and housing should be a lot less, so >30k should still be doable. (I seem to recall about that savings rate in the not too distant past)

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Re: Bought a house for 560k in 2007

Post by KlangFool » Sat Dec 24, 2016 9:23 pm

Sunshine22 wrote:I am in the process of ref. the house and if that happens than some money will go towards mortgage and I found this renter own my own and has been renting since I moved.I was a software consultant for 6-8 years and the billing rate that I used to get translated into a 200k cask per year.My wife doesn't work and I have two kids out of which one will be ready for a college soon.After my project ended I was home for an year looking for jobs and nothing worked out.Eventually I got a fulltime position in Atlanta paying 130k and had no choice but to start te job and rent the house.I always made a salary of 110k-120k and I have been in US for past 20 years.My finances worked out very well until I bought this house and I started consulting at the same time.My kids were little so has to pay for their preschool and all.I had to buy health ins for family since had no benefits and I had a long drive to work.My mortgage payment is 3000 per month and adding all other expenses I could save some but when I stayed home for an year my savings went away [u].Right now I have may be 40k in cash and I want to buy a small house around 300k[/u] on Atlanta for my family but my wife doesn't want to stay here as she finds it too hot to live.She wants to go back to NJ and insists me to get a job there but I have only been in this position for 3 years and don't feel it's a right time to leave the company.I may not find another job soon that too in NJ though I have 20 years of an exp working in US.


Sunshine22,

1) My finances worked out very well until I bought this house and I started consulting at the same time.

2) I could save some but when I stayed home for an year my savings went away

3) [u].Right now I have may be 40k in cash and I want to buy a small house around 300k[/u]

Looking at all the facts:

A) A person that has his finance in good shape will not be wiped out when he is unemployed for 1 year.

B) Before you fix the NJ house problem, you want to buy another house.

C) And, you had been in the USA for 20 years.

In summary, you are in a very bad financial shape and you are about to repeat the same mistake of buying a house again.

KlangFool

Dieharder
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Re: Bought a house for 560k in 2007

Post by Dieharder » Sat Dec 24, 2016 9:34 pm

20 years with above average income and no savings :shock: something still not right. OP isn't giving full disclosure. Two children going to pre-school is costly, but still leaves a lot for savings. That is done now given at least one is going to college. Wife did not work, but she also did not spend for work related expenses and she was home for the children after school. Could she help with something though? many people are able to do some work from home. Where did all the money go? expensive cars and vacations? loans to relatives? something has to be there.

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sat Dec 24, 2016 10:17 pm

I am actually the wife posting on behalf of my husband.I keep asking my husband where did the money go all these years and he says that the spending was too high .I was always stay at home but I never spent extravagantly and my husband always kept me out of money matters.I took charge of grocery and clothes and all other bills were paid by him.I make several spreadsheets putting down the salary on and then expenses there for all the past years and I usually arrive at savings.Per my husband my spreadsheet is hypothetical and he always asks me to look at the credit card statements .I keep asking him that if he hiding the money somewhere but he says that why would he do that .All these years I was sitting peaceful thinking that my husband would be saving somewhere but the reality is diff and shocking.I have an access to our joint account and there is nothing there neither does he has any other account.I wish to go back to NJ and live in my house and take the tax benefit of mortgage interest but he wouldn't look for jobs there.In past 10 years I have been to China only once with my kids and we did only one vacation in US.I keep on creating my spreadsheets but can't figure out where the money went.He has been in US since 1996 and we got married in 2001, since then his salary has always been over 100k.While buying the house he only put down 60k as downpayment and then 60k extra later on .He just bought one apartment in China for 50k in 2000 and was consistently sending money towards that for sometime .At this point I just can't make sense out of anything.

LarryAllen
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Re: Bought a house for 560k in 2007

Post by LarryAllen » Sat Dec 24, 2016 10:22 pm

Sell the house and then start keeping track of your expenses.

KlangFool
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Re: Bought a house for 560k in 2007

Post by KlangFool » Sat Dec 24, 2016 10:26 pm

Sunshine22 wrote:
I wish to go back to NJ and live in my house and take the tax benefit of mortgage interest but he wouldn't look for jobs there.In past 10 years I have been to China only once with my kids and we did only one vacation in US.I keep on creating my spreadsheets but can't figure out where the money went.He has been in US since 1996 and we got married in 2001, since then his salary has always been over 100k.While buying the house he only put down 60k as downpayment and then 60k extra later on .He just bought one apartment in China for 50k in 2000 and was consistently sending money towards that for sometime .At this point I just can't make sense out of anything.


Sunshine22,

1) You cannot afford to keep the NJ house. So, why bother to go back to NJ?

2) You cannot afford to buy a house in Atlanta.

3) Your family is spending too much money and save nothing.

That is the truth. If I want to guess, the NJ house is killing you financially. How much is the monthly mortgage payment?

<< He just bought one apartment in China for 50k in 2000 and was consistently sending money towards that for sometime >>

How could that be true if it is only a 50K apartment?

KlangFool

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sat Dec 24, 2016 10:39 pm

Our mortgage payment is $3000 per month.I really wish to go back to NJ since I love cold weather and Atlanta is too hot during summer.

Dieharder
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Re: Bought a house for 560k in 2007

Post by Dieharder » Sat Dec 24, 2016 10:41 pm

I suspect we are getting trolled here again ...

Dilbydog
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Re: Bought a house for 560k in 2007

Post by Dilbydog » Sat Dec 24, 2016 11:18 pm

Dieharder wrote:I suspect we are getting trolled here again ...


Yup

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sun Dec 25, 2016 12:01 am

No I am not trolling anyone.Whatever I said is a fact.

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Watty
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Re: Bought a house for 560k in 2007

Post by Watty » Sun Dec 25, 2016 12:21 am

One potential problem with selling the house is that there may be a lot of depreciation that will be recovered when it is sold so that there could capital gain on the sale even if it is sold at a loss. Be sure to know what the tax implications are before you sell it. The taxes on a personal residence that was converted to a rental and then sold will be complex and you will likely need professional tax advice.

Some things that you might review to start getting a handle on the family finances are;
1) Your tax returns which you signed.

2) Both your and you husbands credit reports.

3) Paystubs and bank statements.

I am in Atlanta and $130K is a VERY good for Atlanta so with that income you should be able to easily save tens of thousands of dollars a year if you are not spending excessively or have something like high medical bills.

dopamineagonist
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Re: Bought a house for 560k in 2007

Post by dopamineagonist » Sun Dec 25, 2016 12:52 am

I don't think your husband is being truthful to you regarding where all the money is going, if what you're saying is fact. Also why have a condo in china, when you only visit once in 20 years? is someone renting that condo or is it just another money pit? if you are in this terrible financial situation, why not sell that condo to get at least the 50k back? The other side of the coin is if everything is truthful between your husband and yourself, then you guys are just terrible at managing your expense vs income.

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Re: Bought a house for 560k in 2007

Post by TropikThunder » Sun Dec 25, 2016 1:17 am

ryman554 wrote:
Dieharder wrote:
CppCoder wrote:
Sunshine22 wrote:Hi I bought a home for $560k in 2007 , paid 10% down and did an interest only mortgage for the loan for 10 years.


You should have been able to save a good chunk of money on a $200k salary, and you should be able to a least save some on a $130k salary. Something else is wrong here; maybe it's your spending.


+1 200K income and no savings even with HCOL doesn't sound right. You should have at least put 10% in your 401k assuming you had one, and an employer match on top of it (assuming there was one), or some other form of retirement savings. May be you did, and it is not clear if the no savings part is in excess of this.


+2. With 200k income, I suspect one can save about 60k (18k 401(k), 6k HSA, 11k IRA, ~25k after-tax) assuming California with a $3k housing expense (~600k 30 year mortgage) and 10% state taxes and not scrimp too terribly.

At 130k, taxes and housing should be a lot less, so >30k should still be doable. (I seem to recall about that savings rate in the not too distant past)


Back-of-the-envelope calculations: $500k mortgage, average 30-year fixed rate during 2007 was between 6.25% and 7.00%, let's say 6% to be generous. According to Bankrate calculator, a 30-year fixed with 10-year interest only period gives you ~$2,500 per month x120 months, followed by $3,582 x 240 months once the principal payments kick in. Not commenting on the good or bad idea part, but these are/will be the numbers he's looking at prior to refi (several assumptions on my part, obviously).

newbie_Mo
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Re: Bought a house for 560k in 2007

Post by newbie_Mo » Sun Dec 25, 2016 2:01 am

List your expenses if you have them.

How much is the NJ property tax? If you don't sell the house do you think you can afford it even if you move back?

pascal
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Re: Bought a house for 560k in 2007

Post by pascal » Sun Dec 25, 2016 2:18 am

I suspect that the OP has made some bad bets in the stock market probably during the 2008 financial meltdown and is hiding Those transactions from the wife. Probably best to talk over all the transactions that have been made since buying the house in NJ
"Never underestimate the ability of a bad situation to get worse...rapidly." Ninegrams

squirm
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Re: Bought a house for 560k in 2007

Post by squirm » Sun Dec 25, 2016 2:34 am

OAG wrote:Anybody notice this was a 10 year interest only loan taken out in 2007. To me it looks like he will face foreclosure in 2017 if he cannot pay off the loan in a very short period of time.

Should sell quickly - frankly should already have sold as he is facing a possible distress sale in about a maximum of one year.

Yes, these type of loans recasts and now you're stuck with a 20 year loan with original principle. They were time bombs.

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bogleblitz
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Re: Bought a house for 560k in 2007

Post by bogleblitz » Sun Dec 25, 2016 4:00 am

Dieharder wrote:I suspect we are getting trolled here again ...


Edited. Nevermind.
Last edited by bogleblitz on Sun Dec 25, 2016 12:24 pm, edited 1 time in total.

Valuethinker
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Re: Bought a house for 560k in 2007

Post by Valuethinker » Sun Dec 25, 2016 9:15 am

Sunshine22 wrote:I am actually the wife posting on behalf of my husband.I keep asking my husband where did the money go all these years and he says that the spending was too high .I was always stay at home but I never spent extravagantly and my husband always kept me out of money matters.I took charge of grocery and clothes and all other bills were paid by him.I make several spreadsheets putting down the salary on and then expenses there for all the past years and I usually arrive at savings.Per my husband my spreadsheet is hypothetical and he always asks me to look at the credit card statements .I keep asking him that if he hiding the money somewhere but he says that why would he do that .All these years I was sitting peaceful thinking that my husband would be saving somewhere but the reality is diff and shocking.I have an access to our joint account and there is nothing there neither does he has any other account.I wish to go back to NJ and live in my house and take the tax benefit of mortgage interest but he wouldn't look for jobs there.In past 10 years I have been to China only once with my kids and we did only one vacation in US.I keep on creating my spreadsheets but can't figure out where the money went.He has been in US since 1996 and we got married in 2001, since then his salary has always been over 100k.While buying the house he only put down 60k as downpayment and then 60k extra later on .He just bought one apartment in China for 50k in 2000 and was consistently sending money towards that for sometime .At this point I just can't make sense out of anything.


Hi

There is a reality problem with your spouse's accounting. That level of income there should be spare savings. I am sure that you have not been profligate.

This is often a difficult situation where one partner has a problem (gambling, a history of bad or reckless investment decisions) and doesn't want to admit it.

50k would have bought a reasonable flat in China (except maybe Shenzen) in 2000 so it's not clear where that money is going.

You are in a difficult position and you need, as a couple, possibly with the help of a counsellor, to go through everything-- cards on the table. It may well be possible to find a counsellor who also speaks your native dialect of Chinese who can help you-- you may have to do it over Skype, say. This is a combination of family therapy and financial advice so it may take 2 people.

I would look to what is available in money counselling, and family counselling. Because something here is not stacking up. And I realize these conversations are even more difficult between spouses in China and Chinese culture than they are in Anglo-Saxon North American culture. There's an awful lot of spouses (usually wives) in your situation-- often they only find out how bad things are when the debt collectors start knocking on the door or when the other spouse is seriously ill (or dies)-- many men keep all their financial affairs from their wife.

On the NJ house, I would sell it. It's just going to be another thing to worry about.

I am sorry to be the bringer of bad tidings, and I do not wish to seem unsympathetic or overly superior-- pride is as important to Chinese as it is to Americans (and British). But me, a stranger on the internet, would fail you if I did not give what I thought was an honest and straightforward opinion.

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sun Dec 25, 2016 10:07 am

Presuming that we go back to NJ and my husband makes the same salary there as Atlanta which is 130k then the monthly taxes out of this income are $3000 which leaves a take home of around $7000 after 401k and health deduction.
After paying $3000 in mortgage we are left with $4000 per month to run the house and which will only happen if we do no vacations and just live straight with controlled spending .
Once the yearly tax return is done then 130k gross income will be reduced by personal exemptions of $16000 and then itemize deductions of 40k mortgage interest, NJ state taxes .So our withholding was 36k but the tax owed will be 10k and we will get a refund of 26k.We can use this money to reduce the mortgage principle each year or to pay for college of my son .

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sun Dec 25, 2016 10:28 am

Our monthly expenses in NJ -
Mortgage -$3000
Health insurance - $1200
Car payment - $500
Grocery -$500
Cable and telephone -$500
Utilities -$300
Gas - $500
Car repairs -$200
Misc - $500
Kids activities - $700
Preschool for younger son -$ 600-$1200 per month
My husband initially consulted on Corp to Corp but during last two years he was on a w-2 so take home was $10,741 per month .

Expenses in Atlanta -
Rent -$1800
Grocery -$500
Utilities -$200
Gas -$300
NJ mortgage -$3000-rent received $2400
Misc-$500
Car repairs -$200
Cafeteria -$200
Medical bills only for 2016 - $300

Above are the expenses per my knowledge but again per my husband credit card statement is different and we are still not saving anything.

KlangFool
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Re: Bought a house for 560k in 2007

Post by KlangFool » Sun Dec 25, 2016 10:45 am

Sunshine22 wrote:Presuming that we go back to NJ and my husband makes the same salary there as Atlanta which is 130k then the monthly taxes out of this income are $3000 which leaves a take home of around $7000 after 401k and health deduction.
After paying $3000 in mortgage we are left with $4000 per month to run the house and which will only happen if we do no vacations and just live straight with controlled spending .
Once the yearly tax return is done then 130k gross income will be reduced by personal exemptions of $16000 and then itemize deductions of 40k mortgage interest, NJ state taxes .So our withholding was 36k but the tax owed will be 10k and we will get a refund of 26k.We can use this money to reduce the mortgage principle each year or to pay for college of my son .


Sunshine22,

<< Presuming that we go back to NJ and my husband makes the same salary there as Atlanta which is 130k then the monthly taxes out of this income are $3000 which leaves a take home of around $7000 after 401k and health deduction.>>

Which part do you not understand?

A) You can live a good life at Atlanta with a salary of 130k.

B) You were not sustaining your lifestyle with 200K and the NJ house. You save nothing. So, what makes you think that you can survive with 130K?

You cannot afford to keep the NJ house. You either sell it now or lose it later. In either case, it will be gone.

[OT comment removed by admin LadyGeek]

KlangFool

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Re: Bought a house for 560k in 2007

Post by KlangFool » Sun Dec 25, 2016 10:54 am

Sunshine22 wrote:
Above are the expenses per my knowledge but again per my husband credit card statement is different and we are still not saving anything.



Sunshine22,

In summary, all it takes is for your husband to be unemployed a few months and the renter stop paying a few months, you will lose everything. You are living paycheck to paycheck in a low cost of living area like Atlanta. But, somehow, you think you will do a lot better in NJ?

Your housing cost will go up from $1,800 per month to at least $3,000 per month if not higher.

KlangFool

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Re: Bought a house for 560k in 2007

Post by CppCoder » Sun Dec 25, 2016 11:01 am

Sunshine22 wrote:Our monthly expenses in NJ -
Mortgage -$3000
Health insurance - $1200
Car payment - $500
Grocery -$500
Cable and telephone -$500
Utilities -$300
Gas - $500
Car repairs -$200
Misc - $500
Kids activities - $700
Preschool for younger son -$ 600-$1200 per month
My husband initially consulted on Corp to Corp but during last two years he was on a w-2 so take home was $10,741 per month .

Expenses in Atlanta -
Rent -$1800
Grocery -$500
Utilities -$200
Gas -$300
NJ mortgage -$3000-rent received $2400
Misc-$500
Car repairs -$200
Cafeteria -$200
Medical bills only for 2016 - $300

Above are the expenses per my knowledge but again per my husband credit card statement is different and we are still not saving anything.


Based on those numbers, you should be cash flow positive. Not to sound callous, but it sounds like you have an honesty/marital relationship problem, not a financial problem. I think you've reached the point of diminishing returns with the advice in this post. I'm not sure the bogleheads can be much more help here.

pasadena
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Re: Bought a house for 560k in 2007

Post by pasadena » Sun Dec 25, 2016 11:15 am

Sunshine22 wrote:Our monthly expenses in NJ -
Mortgage -$3000
Health insurance - $1200
Car payment - $500
Grocery -$500
Cable and telephone -$500
Utilities -$300
Gas - $500
Car repairs -$200
Misc - $500
Kids activities - $700
Preschool for younger son -$ 600-$1200 per month
My husband initially consulted on Corp to Corp but during last two years he was on a w-2 so take home was $10,741 per month .

Expenses in Atlanta -
Rent -$1800
Grocery -$500
Utilities -$200
Gas -$300
NJ mortgage -$3000-rent received $2400
Misc-$500
Car repairs -$200
Cafeteria -$200
Medical bills only for 2016 - $300

Above are the expenses per my knowledge but again per my husband credit card statement is different and we are still not saving anything.


I'm surprised at some of the comments. Can we try to help and not judge so much ?

Sunshine22 - this is the situation you are in now, and good of you to realize there is a problem and try to fix it. Did Mrs Sunshine also write the first post, or is this a joint effort ?

Now. All the posts here saying you can't afford the NJ house are right. That doesn't mean you can't afford something else, maybe in a colder part of the country, but that specific house should go. And it should go before the principal payments kick in. You said you are refinancing it - what are your prospects on this ?

Now, you seem to understand you have a bigger problem and that is the fact that you never got into your household finances, and that you clearly have some communication issues with your husband.

You need to fix this, ASAP. You apparently have access to all your family's accounts and statements. Go through them with a fine comb. You absolutely have to understand where the money is going (and where it's coming from). Maybe you think $200 for car repairs is what you spend, when it's actually $800, etc. Try to tally this for at least the past year. That will give you a much needed understanding of your finances, and a good starting point.

I would also get a detailed credit report for both of you - in fact that's probably the very first thing I'd do. Right now.

You say "my husband credit card statement is different". Can you expand on that ? What is different ? How much ?

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Re: Bought a house for 560k in 2007

Post by LadyGeek » Sun Dec 25, 2016 11:31 am

I removed an off-topic comment and a few replies. As a reminder, see: General Etiquette
We expect this forum to be a place where people can feel comfortable asking questions and where debates and discussions are conducted in civil tones...

At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.

Experienced members should read: Please Do Not Bite the Newcomers
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Re: Bought a house for 560k in 2007

Post by KlangFool » Sun Dec 25, 2016 11:41 am

OP,

Both of the spouses need to have a realistic view of the financial affair at hand. You cannot have it all. You need to decide where to spend your money.

On the other hand, the financial situation is not totally hopeless. You can have a good life if you live a reasonable life.

A) Sell the NJ house.

B) Buy an Atlanta house in the 200K to 300K range. Put 20% down and 30 years mortgage. With your rent at $1,800 per month, it could be close to whatever you are paying for rent.

C) If you choose to pay for your son's college, you will really have to save on everything else. He may have to go in-state and stay at home and commute. 15K per year if he stays at home. 30K per year if he stays at the dorm. Those are rough estimates.

D) It may not be possible for your husband to find a 130K job at NJ. It does not work that way for many professions. Especially for somebody with 20+ years of experience. It is either a 200K job in NJ or nothing. In all likelihood, he had tried and failed. But, he probably won't tell you.

Good luck!

KlangFool

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Re: Bought a house for 560k in 2007

Post by newbie_Mo » Sun Dec 25, 2016 12:33 pm

OP. You listed a mortgage of $3000 a month but never listed your property tax. My understanding is that property tax in NJ is quite high. It is not unusual for you to get a $20k property tax bill on a house worth $500k. Did you somehow forget about that?

Your rent doesn't even cover your current mortgage amount. You are losing $7200 per year on the NJ house + whatever property tax on that house.

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Re: Bought a house for 560k in 2007

Post by CppCoder » Sun Dec 25, 2016 12:54 pm

KlangFool wrote:C) If you choose to pay for your son's college, you will really have to save on everything else. He may have to go in-state and stay at home and commute. 15K per year if he stays at home. 30K per year if he stays at the dorm. Those are rough estimates.

+1. Georgia has some excellent universities: Georgia Tech for the tech inclined (right in your back yard in Atlanta, too) and The University of Georgia. I knew a lot of people who went to school in-state in Georgia. If you go that route, make sure to look into the HOPE scholarship fund. Twenty years ago, at least, it paid roughly 100% in-state tuition in Georgia.

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Some straight talk is needed

Post by daveatca » Sun Dec 25, 2016 1:29 pm

Sunshine22 wrote:Our monthly expenses in NJ -
Cable and telephone -$500.

This makes no sense to me. Seems at least $300 too much.

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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sun Dec 25, 2016 2:22 pm

Editef
Last edited by Sunshine22 on Sun Sep 17, 2017 10:24 pm, edited 1 time in total.

orca91
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Re: Bought a house for 560k in 2007

Post by orca91 » Sun Dec 25, 2016 2:26 pm

I'd be surprised if that's the way your interest only for 10 years mortgage works and the payment doesn't go up in 2017. Maybe it does though.

But, you said you're in the process of refinancing it now. What sort of refinance and what are the terms of that?

Sunshine22
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Re: Bought a house for 560k in 2007

Post by Sunshine22 » Sun Dec 25, 2016 2:37 pm

The mortgage loan will reset for another 30 years at 4.75% interest rate.

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