6 years and still owe more then its worth

[Mytical]

Not sure if this is the right section, but just a vent here..and since it might lead to fratching..safer to put it here then on other forums.

I've been paying on my house for 6 years. True only $584/month..but I digress. We purchased the place for 67,900. Currently owe roughly 60,000 and it is valued at 52,700 thanks to the housing market. So after paying for 6 years, I still owe 10,200 MORE then it is currently worth. Yay. Sure if the housing market turns around (not happening soon), that may change, but it is just sad. I know, could be worse..there are people who paid 200k+ who are selling for under 100k.

Seems like I will never get it paid off though. Ok..rant over.

Worse, the interest rate is ONLY 5.5%..actually a little lower because it was first time home buyer..so I think it might be 4.5%. We are still figuring out how it is we owe as much as we do.

[Racket_Man]

sounds like the predictiment my GM is (was) in. about 5 years ago (before the housing bubble burst) he purchased a house near his former store about 90 miles from where I am). purchase price around $85k. in the interveining years he put about $10k to $15k into renovations and upgrades.

after he got transfered to our area he needed to sell the house. in the current market he could only get $80k for the house and had to bring like $20k cash to the table at closing

[Mytical]

Yeah..housing market pretty much went belly up here also, and made worse when the biggest remaining employer moved out of the city. Until then it had gotten to be worth about 72,500 (right before the burst).

[Boozy]

I cannot believe how cheap houses are in the US.

I quite honestly don't know where you'd have to move to in Canada to find a free-standing non-mobile home worth that little. We're currently looking at houses in the $200K range, and they aren't fancy by a long shot.

[FArchivist]

Worse, the interest rate is ONLY 5.5%..actually a little lower because it was first time home buyer..so I think it might be 4.5%. We are still figuring out how it is we owe as much as we do.

Wait, what?
So let me get this straight.
You purchased the house for $67900, with an interest rate of 5.5%.
You've been paying $586/mo for 6 years.
So you've paid $42048 total over a 6 year period and you still owe around $60K?
Even if the interest rate is at 5.5%, that still means you'd only have to pay $71634.50 total to clear it.

Something is seriously wrong here. Do you have a fixed-rate or variable-rate mortgage?

[HYHYBT]

Sounds about right to me. The first several years are always almost all interest.

The good thing is, unless and until you have to move, the only difference between the way things are and the way they'd be if housing prices hadn't dropped is that you can't borrow against the equity. And even if it were worth what you'd paid, you wouldn't have that much at this point anyway.

[BlaqueKatt]

Sounds about right to me. The first several years are always almost all interest.

no that does not sound right, as that rate is a 15 year mortgage, and over a third of the way through have only paid off 10%.


67,900-initial amount @ 5.5%
interest for the first year=3,734.50
payments the first year=7,008
3273.50 would be to principle of loan

multiply that by 6 years it is NOT the eight thousand that has been paid off

It comes out to 19,641 and the amount of interest would be going down, that math to me is more than a bit off.....it equal out to 80% of the money going towards interest which would be $5,606.40 interest per year.

so yeah that's some weird math...

[Aethian]

BlaqueKatt is right, the math is off. Mytical, are you sure about your numbers? Not being sure about them is the biggest way to get yourself in trouble. I suggest you go back and see check over all your mortgage statements. I think your paying hidden fees that you shouldn't be paying.

[Fashion Lad!]

I cannot believe how cheap houses are in the US.

I quite honestly don't know where you'd have to move to in Canada to find a free-standing non-mobile home worth that little. We're currently looking at houses in the $200K range, and they aren't fancy by a long shot.

It really depends on where in the US you are. Decent houses in my area go for at least $150k, more if you want anything resembling a lawn. I bought my house with 2 acres of land for $207k. It's not that fancy, out of city limits, 3 bedroom, 2 bath and a 5 car garage.

[muses_nightmare]

I cannot believe how cheap houses are in the US.

I quite honestly don't know where you'd have to move to in Canada to find a free-standing non-mobile home worth that little. We're currently looking at houses in the $200K range, and they aren't fancy by a long shot.

Try Northern BC. Specifically places where Mills or Major businesses have shut down.

Me and the BF eventually want to buy a house, but we know that it's probably not going to be in the city we currently live in. Housing prices may be a little less than they are in some areas, but Burnaby is still pretty expensive. Unless something really great happens job/money wise for us, then it's going to be awhile before we even go beyond thinking about buying a house. And we really would rather not live in a condo.

I can't really speak for the math on this though, though from what others have said it does sound a little off.

[guywithashovel]

Houses here in Central Ohio are usually cheaper than in the rest of the country. Back before the housing crisis, a decent starter home here would have run about $100K-$120K, give or take a few thousand. Think ranch homes with three bedrooms, a living room, a kitchen, a dining area, and maybe a den and a basement a basement, and maybe a garage, too.

Right now, many of those types of homes are going for $60K or less. Heck, I've been casually shopping around for a house, and I've seen some really nice places going for $100K.

To give you an idea, I've had my eye on a ranch home built in 1956 with five rooms (3 bedrooms), 1,066 square feet, a one-car garage, and a full basement that is going for $47,000.

[Nyoibo]

Wow, houses are really cheap over there, the cheapest median house prices in the worst suburbs in South Australia still top $200,000, the median house prices in the state have risen in the last 8 years from $130,000 to over $350,000, there's a reason so many people still live at home.

[Andara Bledin]

Yeah..housing market pretty much went belly up here also, and made worse when the biggest remaining employer moved out of the city. Until then it had gotten to be worth about 72,500 (right before the burst).

Housing market's been on an unstable bubble for about 20+ years; There was no way it could sustain that level of growth. Right now, the market is towards the upper limit of what it should have been all along and is likely to drop a bit more in the immediate future, but only a small amount.

We're buying a house, now, and it's likely to lose $10-20k sometime in the next year or so. We figure that it's worth a year or so of rent we're not paying to own something with equity.

I'm in sou Cali, in the greater Los Angeles area, and we've got an offer in on a place that's ok'd to sell short at $138k. it's a 2 bedroom, about 875 square feet, and has a small patch of front lawn, paved over back yard and a free-standing 1.5 car garage. The neighborhood's not the greatest, but not trashy, either.

What you would consider "nice" places usually start at about $200k, even after the dive and even with some selling short.

As an aside, short sale means short of money not short of time. Basically, the bank agrees to sell for less than the total on the mortgage so they can get something back and not have to forclose - better for everybody involved.

^-.-^

[Mytical]

Not hidden charges, we have to pay mortgage insurance. It is a 30 year loan btw. Mortgage insurance means that if something happens to the person who took out the mortgage (ie they pass away) the company gets their money from an insurance company. There is also land tax which is included in the amount we pay the bank. We are still trying to figure out why we owe as much as we do, as it should be less..especially with the first time home buyers discount on the interest rate (original rate was 5.5, and it is supposed to be lower with the discount). It is fixed btw...I wouldn't take an adjustable. With all of the problems and lower interest rate, that was probably a mistake.

The total amount we are supposed to have paid by the end of the 30 years is somewhere around 170k. One thing to remember is interest is compounded monthly. So at the start it was 311.21 a month just for interest. Roughly .00458333 interest a month.

[HYHYBT]

OK... if some of that 586 is mortgage insurance, that would make it fit. If the *whole* amount were applied to the mortgage, after 72 months (if I've done this right) you'd owe 44,521 and be paid off in just under 14 years.