Posted on: 12th Nov, 2008 12:07 pm
Some great articles here and I am hoping that I can get some help with my specific situation.
My wife and I bought our home 2 years ago at the height of the market. She is on title but not the loan by the way. We paid no money down for our home and took a first for 600k and a second for 150k. ($750k total) Our payments are interest only and are around $4250 a month. We can make the payments fine but here is the rub.
The house that we bought for $750k is now appraised at $475k and falling. Even with moderate appreciation (which is still not on the horizon) we will pay $375k in interest over a period of the next 7 years and still owe 750k on a home worth less than 750K. I say 7 years as that is the approximate time frame it would take me to fix my credit. This vs. having a large amount of cash savings after 7 years of renting.
I can’t make the math work out for staying unless we see appreciation of 14ish % a year which I personally think is highly unlikely given the reduced pool of potential buyers that comes with tighter lending standards. I am a first time buyer and don’t know what I am missing when I try to assess my personal situation and come to a decision similar to the way I would in my professional life.
What if anything am I missing and any opinions on best courses would be greatly appreciated.
My wife and I bought our home 2 years ago at the height of the market. She is on title but not the loan by the way. We paid no money down for our home and took a first for 600k and a second for 150k. ($750k total) Our payments are interest only and are around $4250 a month. We can make the payments fine but here is the rub.
The house that we bought for $750k is now appraised at $475k and falling. Even with moderate appreciation (which is still not on the horizon) we will pay $375k in interest over a period of the next 7 years and still owe 750k on a home worth less than 750K. I say 7 years as that is the approximate time frame it would take me to fix my credit. This vs. having a large amount of cash savings after 7 years of renting.
I can’t make the math work out for staying unless we see appreciation of 14ish % a year which I personally think is highly unlikely given the reduced pool of potential buyers that comes with tighter lending standards. I am a first time buyer and don’t know what I am missing when I try to assess my personal situation and come to a decision similar to the way I would in my professional life.
What if anything am I missing and any opinions on best courses would be greatly appreciated.
I should have mentioned that the second for $150k was a home equitly line of credit that is adjustable. The first is a 30 yr fixed.
Thanks again for any responses
Thanks again for any responses
hi trevor!
as it is an interest only mortgage, i would suggest you to pay some amount towards the principal after speaking to the lender. this will help you in reducing the principal amount owed by you. as far as i know, you will not have pay any penalty if you are paying towards the principal.
as far as both the loans are concerned, you can try and refinance them if possible. if you can merge both the loans into one, then i think it will be easier for you to handle the loan payments.
thanks.
as it is an interest only mortgage, i would suggest you to pay some amount towards the principal after speaking to the lender. this will help you in reducing the principal amount owed by you. as far as i know, you will not have pay any penalty if you are paying towards the principal.
as far as both the loans are concerned, you can try and refinance them if possible. if you can merge both the loans into one, then i think it will be easier for you to handle the loan payments.
thanks.