What can we do if our investment homes are deep underwater?
Date: Friday December 12, 2008Posted in: Credit Loans, Economics, Real Estate, finance, legal stuff
I understand that many people live in a home that they purchased a few years ago and they were given a loan payment that was more than 50 percent of their montly income. So now they realize that it is too expensive to pay it and they are looking into doing a short sale or foreclosure. Well it looks like their is some government help available to help them modify their loans, forgive some of their principal, give them lower payments and keep their credit intact. Well that is good for those who are honest and deserve a second chance.
But I have a slightly different situation. My wife and I purchased a second “investment” home in Florida. This home was a complete failure. We paid over $320,000 and now it is worth only $150,000. The builder totally ripped us off. We have good credit, but the rent income from this home does not even pay half of the expenses to keep it, even at the lowest interest rates, and the taxes are very high too. So it is costing us $1000 per month to keep something that is so far underwater that you can compare it to paying for life support on someone who is totally brain dead. We have good credit now, but is it worth it to keep throwing away $1000 per month, or risk loosing some of our credit for a few years. We have no problem paying our primary home mortgage and other bills. but is our credit going to be ruined so bad, only based on one bad item out of 15 other items on our credit report that are in perfect standing, payed on time etc. Can I compare this to getting one or even 2 F’s on a test, when all my other grades are A’s?
I have found a realtor that will help me to short sell this home for a very small fee.
I also have a few credit card balances that I am willing to pay off prior to the short sale. We are also going to try not to miss any payments unless the bank requires us to show some sort of financial hardship. If that happens, I can use the same money to pay off my credit cards completely. Is that a good idea, to boost my credit score up as much as possible, before the short sale inpacts it?
Please post comments or email me with any info. Thanks
Miami is a beautiful city, but why aren’t more people supporting McCain?
Date: Monday November 3, 2008Posted in: Economics, Politics, Taxes, immigration, justice, legal stuff, scams
If Florida looses its electoral votes to the Democrats, it is not because Obama is a better canditate that will help all the small business in Miami and other major cities. It is because over the years too many people from foreign countries have moved into South Florida and while some of them are real good people, others are not, they are just greedy, dishonest and corrupt people. They come to America to milk the system. They are not Joe the Plumber, who honestly pays his taxes and license fees, and then worries about the possible effects of a socialist presidency.
Instead these people cheat, and believe me there are many of them in Miami who cheat on their taxes. What they do is, they come to Miami, they get fake papers and then they open up a small service business some which are also unlicensed business. They are usually Painters, Movers, Landscapers, Hanyman, Roofers, plumbers and a few other service business. They drive around in an old van or prickup truck too. Some of them make close to $100,000 a year, but since they get paid in cash for most jobs, they only have to claim that they make $20,000 a year. They also claim the earned income credit and a few other itemized deductions and then some get back $4000 on their tax returns.
Who do you think pays for this? And now the worst part, is that these are the same people who are crazy about Obama! They are the reason that I am so convinced that Obama is corrupt too. He is not much of a patriot either. But lets skip that for now.
I call them Juan the Handyman, Jose the Plumber etc. Miami has so many of these people and if Florida looses to the Democrats, that is the reason why. My childred have to go to school with their children and then come home to tell me that all the other kids in the school want to see Obama for president and it make me want to get on a plane and leave the country. I don’t think this will be America anymore if that guy wins.
There are so many dishonest people. I hope somebody finds a better way to crack down on them. Maybe big government is what is needed to get these people busted! They can learn there own lessons the hard way.
I live in Miami Florida and I personally know of many people who cheat on their taxes. There are so many of my own neigbors who either own a small unlicensed business usually landscapers, hanyman or other service business and they brag about making close to $100,000 a year, yet since they get paid in cash for most jobs, they only claim to make $20,000 a year. They also claim the earned income credit and get back $4000 on their tax returns. These are the same people who are crazy about Obama!
I call them Juan the Handyman, Jose the Plumber etc. Miami has so many of these people and if Florida looses to the Democrats, that is the reason why.
so many dishonest people. I hope somebody finds a better way to crack down on them. Maybe big government is what is needed to get these people busted! They can learn there own lessons the hard way.
Please God, let McCain and Sarah Palin win. I love my county and want to be able to keep living here honestly!!
Will the new housing bill apply to investment homes?
Date: Thursday July 31, 2008Posted in: Economics, Politics, Real Estate, finance, legal stuff
By Author: David A Perry
This past week Congress passed the long awaited housing bill. President Bush also signed it, so the new law is about to be available to help us victims of the 2005 housing bubble. The bill has a few differnent parts. The first part gives some interest free money in the form of a tax credit to any first time home buyers. This should help attract some new buyers and maybe it will increase the sales of homes over the next year or so.
The second part is like a governement sponsored loan modication law. It offers some incentives to banks to let them forgive us of some of our debt as we forgive those who …. LOL.
It looks like the Federal Government will give some of the lost money back to the bank, if they choose to let us borrowers who can’t afford to keep paying our high mortgages, because of high payments, low equity and a few other factors such as the reset of the loan payments on those teaser rate, option payment ARMs etc. ,that are accruing negative equity. Usually after 3 or 5 years the bank has to re-evaluate these loans and when they realize that your home has no equity, up goes the payment! So now what happens when you can no longer afford that payment. If the payment exceeds 75 percent of what you earn in a month, you are going to have a problem paying it, and this is something that the banks did not take it to consideration when you were originally approved for the loan.
Up until last year, if you had good credit, you could qualify for a mortgage at almost any bank, as long as you monthly income was 50 percent of the minimun payment. They never looked at your fully amortized payment to see if you made enough income to pay that. And in the case that the bank did check that, in most cases you could ask for stated income and boom you qualified for the loan anyway!
Well the new law is going to forgive us for all of that negative equity that happened as a result of us paying the less than interest only rate, and also the sharp decline in home values. This part occured because of 3 reasons:
1) Too many foreclosures and short sales. Sales at super low prices. This really reduces the average market values in any neigborhood.
2) Too hard for new buyers to get loans or qualify for them. This is because Banks had to get tougher and they realized their mistakes that are leading to so many foreclosures and short sales.
3) Prices that are too high to effecively yield any positive cash flow even if you rent out the place. Thanks to the Bubble of 2005 - 2006 ! So this makes it cheaper to rent, but not worth it to buy!
Well the new housing bill promises to forgive the negative equity and gives the homeowners that have not already foreclosed a second chance. So if you owe the bank $280,000 and your home is now only worth $180,000 your bank will have to eat the $100,000 loss and give you a new loan for 90 percent of the new value. So now you get a new loan for $162,000 and now you can get it with a 6.5 percent fully amortized payment that is probably equal to your old teaser rate payment! This is almost too good 2 be true.
My only question is: Will this law apply to our investment homes too?
