WHAT TO DO.......????

[SV Someday Came]

Originally Posted by skifinnatic

Ok....here's my story....35 yo male with 30 yo wife, 3 kids, ages 6,4, and 2. I make $110,00/year, my mortgage balance is $600,000, my house is worth $525,000. Neadless to say I'm upside down. My goal before the housing market tanked was to use my equity to purchase my live aboard and then sell the house. I DO NOT WANT TO GET LANDLOCKED in my house. I want to get out on the water with my family. I feel stuck now.....any suggestions????

Other than a specific street address, roughly where are you in Socal? And Ex-Calif is correct: Don't take advice from the internet!

Meanwhile, a couple of weigh-in opinions:

1. No one here on this board knows when the housing market will start to recover, and when it does, no one here knows the recovery curve.

2. You are not necessarily "dreaming of escape" and therefore, you may not be "running away" from anything. Be careful of internet psychoanalysis that cast opinions as fact. You feel stuck, but just because you feel stuck does not mean you are running away from anything. You are looking and exploring your options.

3. No one here knows your financial situation enough to either cast moral judgement or make useful predictions. You want to walk away from a mortgage, walk away. You will recover. You want to stick it out and keep your investment despite being top heavy, you likely will recover from that too. However, if there ever was a time best to walk-away, this is the time. As long as you pay your bills on time, keep lower balances on your credit cards, make utility and car payments on time, your credit scores always recover in time. You need to know the housing market in your area. Talk to a couple of real estate people. How many homes in your neighborhood are in foreclosure? What is the asking vs final selling price? Get some opinions as to when recovery may or may not start. Look at what you make. Then decide. There are some good mortgage calculators on the net. Run some scenarios in which you make bimonthly payments, or scenarios where you pay extra per month. Look at the resulting curves over the years. How long would it take to bring the mortgage down so that the unit could be rented? Or, is there even a rental market for your area? It very well be in your financial best interests to simply mail the keys to the bank. Foreclosures do not "add to everyone's problems". They might grate someone's sensibilities, and that is their issue -- not yours. Don't take that crap on yourself. Walking away might very well be the right thing for you to do. AND it very well maybe that your current house could be the ticket to helping you cruise in your golden years -- but you cannot know that until you do an (a) analysis of your housing market and (b) your finances.

5. Your kids will not learn "bad habits" from you if your choose foreclosure as suggested and implied in this thread. They will be far more adversely affected by long term stress in a house than the knowledge that dad had a foreclosure. Impressing personal responsibility on kids is a cumulative thing -- it is not a process that tanks on one foreclosure.

6. Livingaboard is a huge change -- HUGE. Downsizing takes serious time and effort. And it has to work for everyone -- especially the wife. Kids at your ages are resilient. Where does your wife weigh in? What does she want to do? Read what other families have done about liveaboards -- but do the reading in tandem with your wife and she how she feels about it. You can always make arguments one way or another -- it is better to wait till the kids are older and it is better to do it now when they can learn to adapt. Read blogs and accounts of families that live aboard. Search for books on the topic. Strictly Sail will be held in Oakland, California this April. Go to it with your family and attend the various cruising seminars. Invariably there are cruising families there that present. Talk to them. If you do not know boats well, then you likely do not know (yet) what size is best for your needs.

7. Livingaboard requires a liveaboard slip. My understanding is that the rules allow Marinas to only let 10% of their slips be liveaboards. Finding a slip is already challenging -- finding a liveaboard slip will be more so. If this is really what you want to do, then you will have to consider Marinas up and down the Pacific coast. Seattle? Portland? Tucked away in a back corner of the San Francisco Bay? Don't underestimate how much time you WILL use to find the right slip! Can your career take you to another region? Or are you permanently affixed here in Socal? You are going to have to sequence alot of things to move aboard! And finding a boat needs to be done in tandem with finding the right slip. If you work with a broker, they may be able to also help you with the right slip.

8. It would not necessarily be "a mess for you" if there was an IRS agent or a banker on this board. What BS. Do not let fear cloud your judgement or another's actions determine what is best for you. Do your numbers, weigh the costs, risks, and benefits. Then make your choices.

Michael

[wampler]

We are also upside down on our house be we would never consider just walking away from our responsibilities. I would recommend that you join your local yacht club, buy a sailing dingy to learn on, and enjoy what you have. I know I'm not very old, experienced, or rich but I don't see how borrowing more money and buying more stuff is going to make you happier. My best sailing trip was spending a week camping in St Andrews State park FL with my wife (no kids yet). We trailer our mutineer 15 down there and enjoyed an entire week of camping, Sailing, and playing on white sandy beaches all for a few hundred bucks. Of course I have not yet had the pleasure of taking a Caribbean cruise on a nice 40 footer so maybe I have yet to experience true sailing. I will remain blissfully ignorant until then. Sorry for the rant and I hope you and your family enjoy sailing as much as I do.

Thank you for your service and God bless you and your family.

[Therapy]

Originally Posted by skifinnatic

Ok....
. I make $110,00/year, my mortgage balance is $600,000, my house is worth $525,000.

DANG!!!

When we bought our first house it was roughly 2 times our combined salarys and that was not real comfortable for me.

6 times.........Ay Yay Yaayyyyy...........

Sorry I cannot help you with a decision.

[skifinnatic]

Originally Posted by MV

Other than a specific street address, roughly where are you in Socal? And Ex-Calif is correct: Don't take advice from the internet!

Meanwhile, a couple of weigh-in opinions:

1. No one here on this board knows when the housing market will start to recover, and when it does, no one here knows the recovery curve.

2. You are not necessarily "dreaming of escape" and therefore, you may not be "running away" from anything. Be careful of internet psychoanalysis that cast opinions as fact. You feel stuck, but just because you feel stuck does not mean you are running away from anything. You are looking and exploring your options.

3. No one here knows your financial situation enough to either cast moral judgement or make useful predictions. You want to walk away from a mortgage, walk away. You will recover. You want to stick it out and keep your investment despite being top heavy, you likely will recover from that too. However, if there ever was a time best to walk-away, this is the time. As long as you pay your bills on time, keep lower balances on your credit cards, make utility and car payments on time, your credit scores always recover in time. You need to know the housing market in your area. Talk to a couple of real estate people. How many homes in your neighborhood are in foreclosure? What is the asking vs final selling price? Get some opinions as to when recovery may or may not start. Look at what you make. Then decide. There are some good mortgage calculators on the net. Run some scenarios in which you make bimonthly payments, or scenarios where you pay extra per month. Look at the resulting curves over the years. How long would it take to bring the mortgage down so that the unit could be rented? Or, is there even a rental market for your area? It very well be in your financial best interests to simply mail the keys to the bank. Foreclosures do not "add to everyone's problems". They might grate someone's sensibilities, and that is their issue -- not yours. Don't take that crap on yourself. Walking away might very well be the right thing for you to do. AND it very well maybe that your current house could be the ticket to helping you cruise in your golden years -- but you cannot know that until you do an (a) analysis of your housing market and (b) your finances.

5. Your kids will not learn "bad habits" from you if your choose foreclosure as suggested and implied in this thread. They will be far more adversely affected by long term stress in a house than the knowledge that dad had a foreclosure. Impressing personal responsibility on kids is a cumulative thing -- it is not a process that tanks on one foreclosure.

6. Livingaboard is a huge change -- HUGE. Downsizing takes serious time and effort. And it has to work for everyone -- especially the wife. Kids at your ages are resilient. Where does your wife weigh in? What does she want to do? Read what other families have done about liveaboards -- but do the reading in tandem with your wife and she how she feels about it. You can always make arguments one way or another -- it is better to wait till the kids are older and it is better to do it now when they can learn to adapt. Read blogs and accounts of families that live aboard. Search for books on the topic. Strictly Sail will be held in Oakland, California this April. Go to it with your family and attend the various cruising seminars. Invariably there are cruising families there that present. Talk to them. If you do not know boats well, then you likely do not know (yet) what size is best for your needs.

7. Livingaboard requires a liveaboard slip. My understanding is that the rules allow Marinas to only let 10% of their slips be liveaboards. Finding a slip is already challenging -- finding a liveaboard slip will be more so. If this is really what you want to do, then you will have to consider Marinas up and down the Pacific coast. Seattle? Portland? Tucked away in a back corner of the San Francisco Bay? Don't underestimate how much time you WILL use to find the right slip! Can your career take you to another region? Or are you permanently affixed here in Socal? You are going to have to sequence alot of things to move aboard! And finding a boat needs to be done in tandem with finding the right slip. If you work with a broker, they may be able to also help you with the right slip.

8. It would not necessarily be "a mess for you" if there was an IRS agent or a banker on this board. What BS. Do not let fear cloud your judgement or another's actions determine what is best for you. Do your numbers, weigh the costs, risks, and benefits. Then make your choices.

Michael

Michael,
Yours is by far the best advice. It sounds like something my dad would say if he was here. Thanks for that. I'm up in Ventura, Ca. My realtor does not see the market turning for at least a couple of years. And, no i'm not running. I want to give my kids an education that they will never forget. I wish my dad had dreamed and done what I want to do. You're not related by any chance to Danny Villanueva are you??? Former General Sales Manager of KMEX.

[imagine2frolic]

Originally Posted by skifinnatic

i2f,
First of all, I am not one of "those Americans." I've served my country in the United States Marine Corps. I've worked hard all my life, starting at the age of 14 bussing tables. I don't have my hand out to the government. I believe in hard work. It's just very frustrating that I see the people doing it right (me) paying my mortgage on time. Is the governement helping me out??? No, they're lowering the principal balances of mortgages of people that aren't doing it right. Once again, the good get punished. IT"S GETTING OLD!!!!

Like I said.....YOU'RE ARE NOT ALONE. I never said you aren't hard working. That has nothing to do with dumping your house , so you can get on a sailboat....I JUST WANT is the problem. Once again BEST WISHES in sorting out the mess....i2f

[SV Someday Came]

Not related to Danny -- but I have been asked that several times now. I need to meet that man! Forget the "running" and just drop it and don't take it on anymore. You will always find moralizing masquerading as "personal responsibility" on boards.

You say a couple of years? I cannot help you making a decision whether to walk or stay. You are simply going to have weigh what is important. Education for your kids is vital and that can take place by sailing to different lands, helping them with their homework, or a great college!

What does the wife say to all this?

[sailinmike]

You're in Ventura? That has to be the cheap boat capital of the world! Stay put in your house, keep your wife and kids secure and happy, check Craig's list for a $3500 Catalina 25 and enjoy the water! Shop carefully and you'll find a good deal on a well equiped boat. Buy the kids a Sabot ( doubles as a dingy for the mothership ) like the others have advised and watch them blossom.

[skifinnatic]

Originally Posted by MV

Not related to Danny -- but I have been asked that several times now. I need to meet that man! Forget the "running" and just drop it and don't take it on anymore. You will always find moralizing masquerading as "personal responsibility" on boards.

You say a couple of years? I cannot help you making a decision whether to walk or stay. You are simply going to have weigh what is important. Education for your kids is vital and that can take place by sailing to different lands, helping them with their homework, or a great college!

What does the wife say to all this?

She is open to live aboard. I have taken her sailing out of Channel Islands and she has enjoyed it. She said she feels like she is being prepared to home school.

[imagine2frolic]

MV,

I am not a lawyer, but here is some one saying they want to squeeze out of their problems. I can only imagine it could lead to a mess. It's not BS. You say not necessarily, but can you promise him if his banker was here. That his own words could not prove difficult for him sometime in the future?

I am not picking an arguement with either one of you. I just don't see how one can approve of his planning when his payments are on time, and he is not behind in anyway. Just because he wants to be on a sailboat.

Well....that's what i'm looking for...a "new plan".....would it be better to buy my boat now, and walk away from my house, letting it foreclose?? If I walked away from my house before i bought the boat, my credit score gets dinged, and hence, cannot buy boat. I could buy boat, move family aboard, and walk away from the house.??

These are his words not mine. Sounds like some premditated thought to me. Could be looked at as possible fraud. Like I said I am not a lawyer, but it does look like a plan that could lead to a mess.

There's nothing wrong with exploring options. Half the country is doing that now. Yes, it has become a mess for even those doing the right thing. Once again life is not always fair......BEST WISHES & have a safe holiday too.....i2f

[svHyLyte]

You're already land locked in your house. I'm guessing your monthly payments are on the order of 40-45K per annum unless you were one of those wizzards that took an Alt-A or pay-option mortgage when it might be less (but will soon be a lot more). I'm guessing your taxes are on the order of $6500 per annum, your insurance has got to be in the neighborhood of $3500; and, you likely have homeowner assoc. fees of another $1,000. All up on your house alone that's in the range of $50K per year, or more, against a gross salary of $110,000. Odd's are you also have one-if not two-car payments, car insurance of another $4K-$5k per annum (two drivers under 40) and a wife and 3 little ones to support.

Frankly, you're already so over extended it would be laughable if it wasn't such an F'ing tragedy, for your wife and children if not you.

If your loan was a 1st for the purchase of a home and not a refi-, you have no personal liability by operation of law (in California). If so, you can walk away from the property without lender recourse for the deficiency. You can probably use this to your advantage to negotiate with your lender unless the loan was bundled in which case there's no one to negotiate with as a servicer cannot negotiate unless the loan is in default, in which case your days are numbered anyway. If the debt is from a refi- you will be one the hook for the deficiency unless you bk, in which case you might want to mark time until there's more clarity as to where the market will be going although with the Obamanation that's about to take office, I'm guessing its nowhere but sideways or down as it looks like we're in for a replay of the 9 year run of recession the followed FDR's "coronation", given that the Obamanites are already talking a replay of his failed "New Deal" policies. In that case you'd be better of trying to negotiate a deed-in-lieu in exchange for a release from liability now, to stem the bleeding. Frankly, you could rent a 3 beadroom home--likely in your own neighborhood--for less than it costs to maintain what you have now.

N'any case son, IMHO at this point you are about as far away from buying a boat to live aboard as you are from the moon. What you do need is a reality check and a credit counselor. You can get your sailing fix for nearly nothing at one of the public sailing programs in Newport or, better, in Dana Point Harbor where the little ones can have some fun too.

In any case, while I dislike sounding unkind, with your situation I think you've wandered into the wrong bar!

s/v HyLyte

[skifinnatic]

Originally Posted by svHyLyte

You're already land locked in your house. I'm guessing your monthly payments are on the order of 40-45K per annum unless you were one of those wizzards that took an Alt-A or pay-option mortgage when it might be less (but will soon be a lot more). I'm guessing your taxes are on the order of $6500 per annum, your insurance has got to be in the neighborhood of $3500; and, you likely have homeowner assoc. fees of another $1,000. All up on your house alone that's in the range of $50K per year, or more, against a gross salary of $110,000. Odd's are you also have one-if not two-car payments, car insurance of another $4K-$5k per annum (two drivers under 40) and a wife and 3 little ones to support.

Frankly, you're already so over extended it would be laughable if it wasn't such an F'ing tragedy, for your wife and children if not you.

If your loan was a 1st for the purchase of a home and not a refi-, you have no personal liability by operation of law (in California). If so, you can walk away from the property without lender recourse for the deficiency. You can probably use this to your advantage to negotiate with your lender unless the loan was bundled in which case there's no one to negotiate with as a servicer cannot negotiate unless the loan is in default, in which case your days are numbered anyway. If the debt is from a refi- you will be one the hook for the deficiency unless you bk, in which case you might want to mark time until there's more clarity as to where the market will be going although with the Obamanation that's about to take office, I'm guessing its nowhere but sideways or down as it looks like we're in for a replay of the 9 year run of recession the followed FDR's "coronation", given that the Obamanites are already talking a replay of his failed "New Deal" policies. In that case you'd be better of trying to negotiate a deed-in-lieu in exchange for a release from liability now, to stem the bleeding. Frankly, you could rent a 3 beadroom home--likely in your own neighborhood--for less than it costs to maintain what you have now.

N'any case son, IMHO at this point you are about as far away from buying a boat to live aboard as you are from the moon. What you do need is a reality check and a credit counselor. You can get your sailing fix for nearly nothing at one of the public sailing programs in Newport or, better, in Dana Point Harbor where the little ones can have some fun too.

In any case, while I dislike sounding unkind, with your situation I think you've wandered into the wrong bar!

s/v HyLyte

LOL...well you couldn't be further from the truth...and you sound like a pesamist arrogant &*%(. You are way off on all your ANALysis. I won't waste my time with you.

[BobJ]

"35 yo male with 30 yo wife, 3 kids, ages 6,4, and 2. I make $110,00/year, my mortgage balance is $600,000, my house is worth $525,000"

You need a slap upside the head. You have a 30 yo wife and three kids - are you all in good health? Somebody is paying you $110,000 a year? You live in a $500,000+ house that you're able to hang on to?

You need to get up every morning and count your blessings. Many, many people dream of being in your position. Hug your wife, hug your kids, and be thankful.

Cruising is a great thing but after all the miles and all the sights (and the busted refrigeration and watermakers), your family will still be the main thing.

You have no idea how much I needed to see myself write this. Thanks for giving me the opportunity.

[wampler]

I'm confused. Are you wanting advise or a yeah go on and walk away from your house and sail away into the sunset. I didn't find anything that svHyLyte said that offensive.

[Tspringer]

Originally Posted by skifinnatic

i2f,
First of all, I am not one of "those Americans." I've served my country in the United States Marine Corps. I've worked hard all my life, starting at the age of 14 bussing tables. I don't have my hand out to the government. I believe in hard work. It's just very frustrating that I see the people doing it right (me) paying my mortgage on time. Is the governement helping me out??? No, they're lowering the principal balances of mortgages of people that aren't doing it right. Once again, the good get punished. IT"S GETTING OLD!!!!

Welcome to the New America. The harder you work, the more you invest into a business, the more you earn..... the more our system will punish you. The less you work, the more you fail, the greater your demand for and dependence upon assistance, the more the Govt. will step up to hand you money and services. That's just the way our system works.

It is highly unlikely that housing values in California are going to return to 2006 levels anytime in the next 15 years or so. That is unless the Govt. manages to inflate things through money supply manipulation to absurd levels and if they do then we all have bigger problems from currency devaluation.

Unfortunately, doing the right thing is going to leave you underwater and chained to your home for a decade or more. Or, you can quit making the payments and sign up for a bailout of your own.

I was raised to believe that we are all responsible for our own actions and the consequences of our actions. If we take on a debt, we are obligated morally to repay that debt. If an investment does sour, we lose and we must deal with it. But when the Govt. begins arbitrarily altering these kinds of basic societal rules and playing social engineering games with our tax dollars and fiscal system it sure makes one question these fundamental rules for life.

Part of me thinks that we should all quit our jobs, quit making loan payments and sign up for every Govt. welfare and bailout program that exists. All of us. Then perhaps when there are no suckers left paying into this Govt. fiasco and everyone is on the receiving end it will be demonstrated plainly enough for even the most stupid Govt. bureaucrat to understand that a Bailout and Welfare driven system does not yield a viable economy.

Perhaps we should ALL become John Galt.




Terry

[Southern Star]

Skifinnatic, I take HyLytes comments as an attempt to outline what are, in his view, your best options. And isn't that what you were asking for? I personally was unaware that in California, banks are not entitled to pursue you for any shortfall in the case of a default on a first mortgage towards the purchase of the home (as opposed to a refinance). If applicable to you, then he certainly seems to be suggesting that such is your best, if not only course of action. No moral outrage or arrogance is expressed.

He also suggests that your income, as stated, would seem to be insufficient to cover your monthly expeditures. If he is wrong and your income combined with your wife's (or some other source) is greater than specified; or, if your expenses are lower than his (fairly reasonable )assumptions, then his analysis will be flawed. But again, if you ask for financial advice and leave us with only part of the picture, you shouldn't complain too loudly if people use assumptions to fill in the necessary holes.

You may object to his comment about Obamanites (which IMO was, as a political dart, inappropriate for this forum); you may also object to the rather harsh way in which he described his perception of your circumstances (don't take it too personally, Hylyte doesn't tend to mince words in expressing his opinions about anyone or anything). But he spent the time to analyze your situation in what I suggest to be (or at least intended to be) a constructive, rather than destructive way. You can choose to agree or disagree, but his post was (for the most part) responsive to your inquiry.

Brad