Author Topic: For those that lost their homes during the Great Recession  (Read 8090 times)

KTG

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For those that lost their homes during the Great Recession
« on: November 20, 2017, 05:55:45 AM »
I guess defaulting on a mortgage can happen at any time, but I was particularly interested in hearing from those who lost their home during the great recession, and looking back, what they might have done differently that may have caused defaulting (buying too expensive of a house, not enough savings to cover the downturn, etc). I know in some cases the best thing to do would have been to walk away from a home, but I know that can't ever be easy. I feel with home prices, and especially rent prices, really rising in my area, I was wondering if we are bound for a similar situation, and how hindsight might change the way we go about deciding what to buy and for how much.

I was in a barber shop last week speaking to another customer who was having a hard time saving up to buy a home, and was considering one of those tiny homes, which I honestly felt would be like throwing money out the window. But if seems to me if people are at the point of considering things like that, that things are getting a little out of control.

Nightwatchman9270

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Re: For those that lost their homes during the Great Recession
« Reply #1 on: November 20, 2017, 08:37:32 AM »
I doubt you'd find too many folks on here who lost their homes.  Most (not all) of those folks were people who bought ARM's, or people who qualified for loans they were in no shape to pay back...people who shouldn't have gotten loans in the first place (at least for the amount loaned to them).

They didn't "lose" their homes. They are still there.  They stopped making mortage payments and then the bank took ownership of their house.
« Last Edit: November 20, 2017, 08:39:28 AM by Nightwatchman9270 »

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Re: For those that lost their homes during the Great Recession
« Reply #2 on: November 20, 2017, 12:17:38 PM »
We were one of the unfortunate people. Looking back, I would have built up a much larger savings and not taken out a HELOC on the house. But I was pretty young at the time and had it in my head that home prices only went up.

When I lost my job, I thought I would go the entrepreneur route instead of find new work. That didn't really pan out. Since construction took such a major hit in our area, eventually I was forced to move out of the area for work. I could not sell the house to satisfy the loan, and I could not rent the house for an amount that would cover the mortgage. At the time I could barely afford our bills, so paying the extra with a renter in the house was not a viable option.

Looking back though, it was a net positive for me financially. I learned a valuable lesson the hard way, but learned it well. Now we are only 4 years out from FIRE, but still have a ridiculously hard time qualifying for a home loan. Banks should be bending over backwards to loan us money, if I wanted we could cash out a few assets and payoff the mortgage. Banks have tied themselves into such a knot and cant make reasonable home loans, I don't know how they stay in business... Oh well.

I know this is a bit of a self serving plug, but I agree with the OP, I wrote an article the other day about why I think house prices are near a top and about to turn. It is exactly the reason the OP stated, and you can actually see it mathematically if you calculate what an average household in a market earns vs the average house price. I don't think house prices at the moment are sustainable, especially if interest rates rise. I'm hoping for a correction so I can buy.

SC93

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Re: For those that lost their homes during the Great Recession
« Reply #3 on: November 20, 2017, 01:13:56 PM »
We didn't lose a house but we had moved to another larger city to expand our cleaning business. Then we weren't getting along and decided to split. Her last day in the house was September 7, 2007. My buddy Randy was the realtor and it was worth $705,000 on that date. He called me on December 21, 2007 and told me the new value of the house was $221,000! We got out just in time or else I would have been stuck in a city that I didn't like as well and where I am at now or Omaha which is where I had moved from originally. I just bought a much cheaper house but not for the price reason, we bought it because we love it. 1957, original hard wood floors and everything else is updated. This house could fall to a $1 value and it wouldn't matter because we will never move again.

As for a tiny house, why not save thousands and buy a travel trailer? I don't get it.....?

Slow&Steady

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Re: For those that lost their homes during the Great Recession
« Reply #4 on: November 20, 2017, 01:55:23 PM »
We did not lose a house but we did move to another state in Aug 2008 and put our house on the market.  After watching the value decrease drastically for a couple months we took it off the market and rented it out.  For the 1st several years we took a $100-$200/month loss on the house until we refinanced it.  Looking back we probably would have saved ourselves a lot of money if we would have been able to get a buyer and taken a loss in the 1st year but I am not sure we would have been able to find a buyer. We didn't have any kids at the time, the $100-$200/month was not a huge hit to us and for some reason walking away never really crossed my mind. 

We still have that house and I often dream about moving back there during retirement, it is a smaller house than what we have now and in a location that is right outside a location that I really love.  The house is now worth more than what we owe and pays for itself, it doesn't really make money but I like the thought of having it as an option to move back to if I get the opportunity. 

As for tiny houses I see the appeal in living in a smaller space, part of the reason I dream of moving back to our old home.  We have a retired neighbor that lives in a small A frame house, 1 bedroom (upstairs), a small living room, a small kitchen, and a bathroom, I don't think it would fit the definition of a tiny house but I am jealous every time I drive by and think of how low their costs probably are.  The retired couple built their house themselves in the 90's but most of the time I don't see a tiny house as actually cost savings.  I have seen several that cost more than $50,000, plus land or a large gas guzzling truck to pull it around.  I know in some locations that is still cheap but in my area of the country (or most areas of the country) the tiny house ends up costing the same as a small home but with not as good resale value.

Greenback Reproduction Specialist

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Re: For those that lost their homes during the Great Recession
« Reply #5 on: November 20, 2017, 02:01:28 PM »
I agree with most about the tiny house thing, they are a complete "fad" right now, and waste of money if you dump all the expensive things into them.... I doubt most will get their money back when they sell... But we also lived in one for 2 yrs while setting up a new foundation financially. Although our situation was A LOT different and our goals were different than most in the tiny house crowd. Our goal was to buy the cheapest land and build the smallest/cheapest structure to live in rent/mortgage free. We probably spent 20k total on the land and structure, completely cashflowed it. Best 20k I ever spent, to this day it is still one of our fall back points just in case things don't work out as planned. Plus we plan to live there post FIRE after building a larger structure. Its been a while since I calc'd this out, but with our current savings account we could live there for something like 20yrs before the cash runs out.

PS. We almost went the travel trailer route, but our property has a pretty high snow load.... Like 150 lbs/sqft.(that's not a typo)
« Last Edit: November 20, 2017, 02:06:43 PM by Greenback Reproduction Specialist »

Cranky

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Re: For those that lost their homes during the Great Recession
« Reply #6 on: November 20, 2017, 02:03:50 PM »
The house next door to me was empty for a couple of years after the owner defaulted in 2010. They needed to move and the house was worth a lot less than the mortgage, plus the banks were reluctant to write mortgages for short sales - they wanted cash. And then it sat empty over the winter and a pipe burst.

I regret not buying it - I think it was listed at $40k at one point and itís a nice house.

Krolik

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Re: For those that lost their homes during the Great Recession
« Reply #7 on: November 20, 2017, 02:21:44 PM »
We bought our townhouse in 2006 in Florida (great idea...I know). We were young and had no clue. We both had jobs and mortgage payments were not a problem. My husband was laid off in 2009 and at that time the house lost ~70% of its value. Due to new job we relocated to Oregon and found a renter for our townhouse in FL. The rent didn't cover all the payments and we decided to cut the losses and do a short sale. We bought the house for $140K and sold it for $45K. Today its Zillow value is estimated at ~100K
It was a tough and emotionally difficult decision to walk away but financially it made sense. Looking from time perspective I am glad we didn't hold on to that property any longer. We should have done it even earlier and not bother with renting it out which was a hassle and didn't help much. Our emotions took over common sense for awhile.

We bought a new house in 2015 with 20% down and had no problem with bank loan. We have enough in our accounts to pay it off if we wish. Our credit scores have recovered. The whole thing was a great lesson.
« Last Edit: November 20, 2017, 02:34:03 PM by Krolik »

Metta

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Re: For those that lost their homes during the Great Recession
« Reply #8 on: November 20, 2017, 02:22:28 PM »
While the Great Recession is recent and traumatic there have been other recessions that have affected people. My parents almost lost their house in the 70s oil recession/stagflation period. The cause was pretty simple: debt. My parents believed that one should buy the most expensive house they could get a loan for, which is what they did. When my father lost his job in the mid-70s he couldn't find another quickly. Colorado had a boom-bust economy and it was solidly in bust with the oil recession. Even as the rest of the nation slowly emerged from the stagflation of the 70s, Colorado remained financially challenged. In addition, the federal government downsized, which had an outsized effect on states with a large federal government presence (like Colorado) and especially for an engineer working for the government. Added to the grief was double-digit inflation (around 18% as I recall) that wiped out savings. So no job, savings rapidly depleted through inflation, and debt. As I recall, my grandmother helped my family at that time.

The solution then as now is to avoid debt, to invest in vehicles that are less subject to inflation risk (equities), and to always remember that life is unstable and there is no security. Be ready at any moment to move on with only what you can carry. Security through bad-assitry and the kindness of family, friends, and strangers.

soccerluvof4

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Re: For those that lost their homes during the Great Recession
« Reply #9 on: November 21, 2017, 04:31:19 AM »
^ well said.  We owned our house and lost 500k on it to sell it but I was done mentally of the stress. Add to it the neighborhood flooded and got a black eye. Building the house myself If a builder would of built it I probably would of lost closer to 800k. I look now and again and the house has been trying to be sold for what I sold it for because of that flood stigma. I was one of 3 of the 64 homes that didnt flood because i was fortunate to see the subdivisions plans/READ THEM  and I re perked the property and brought in a 150+ loads of fill to raise it. So we moved , downsized for the first time and 2 years ago did again. For us it was hard because it was a rotation we would do of build a house, live there two years and build a bigger one. If I knew today what I knew now I wouldn't do it again because things can turn on a dime. But it was all my own money. Fortunately even though we were caught up with hanging with the Joneses we were still conservative enough to move one and pay cash for next house la de dah!  Learned alot and use those teachings to share with my kids alot of do's and dont's.

Vegasgirl

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Re: For those that lost their homes during the Great Recession
« Reply #10 on: November 21, 2017, 05:06:45 AM »
We bought our house in 2002, well before peak for $485k.  We had two mortgages, the standard and the HELOC for the 20% we didn't have for the down payment to not pay PMI.  I think we put 3% down.  We were cash poor but had good jobs and income flow.  The bank had originally approved us for $620k which would have been completely ridiculous.   Anyway DH travels a lot for work so after a full year of being home alone in 2005 and having to take care of everything around the house, I was done.  We put the house up for sale May 2006 for $820k  which again, was crazy to me.  I thought prices were just unsustainable but had we sold it at that point we would have made a mint !! Our plan was to move closer to work and rent for two years or so in order to figure out where we wanted to live.  House was for sale for about a month.  We came back from a vacation and all of a sudden there were 5 other houses for sale on our street.  We didn't have to move, just wanted to so we took it off the market.  A year later house estimated at $550k so still more than what we originally paid and we are still in it today with it worth $650k.   The price swings were crazy to watch.  House will be paid off in 5 years now so no big deal.  Looking forward to being about to move just about anywhere once that happens.  But we'll rent first.  I think we are in a little bubble right now, just not as bad - yet.

BTDretire

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Re: For those that lost their homes during the Great Recession
« Reply #11 on: November 21, 2017, 06:09:44 AM »
I had a paid off house at that time whose value dropped 50%, but didn't affect me.

 About the same for me, I owned my home, it had  increased in value to around $275k at the peak of the bubble, but quickly dropped into the $130,000s area. Since then has only come back to about $160k. We had a condo boom going on, at the bust, (Fl. Panhandle) large properties were abandoned with plumbing sticking out of the ground. It became a problem and lawsuits just to get properties cleaned up.

 Many people were forgiven the debt on the houses they walked away from.
Being mustachians, we may have a few hundred thousand in savings, would the mortgage company let us walk away from a mortgage? We did the right thing by living frugally and saving, but I don't think we could walk away with our savings intact. I know, life isn't fair!

KTG

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Re: For those that lost their homes during the Great Recession
« Reply #12 on: November 21, 2017, 07:19:55 AM »
I was going to talk more about me in another thread, but listening to some of your stories reminded me of my own situation, only its the opposite of my original post.

I was very fortunate during the recession. A delay in figuring out what I wanted to do in life dragged out college for me, and when I finally graduated, the DotCom bust arrived. It took awhile for me to land the job I wanted and I had a lot of debt to dig myself out of. I wasnt really ready to buy a home until around 2007, and at that point, home prices were skyrocketing and I couldnt afford where I wanted to buy. I even asked my dad for help, but he said wait housing was in a bubble and there was no point in buying at the time. I thought he was nuts. He turned out to be very right.

I will never forget driving thru the neighborhoods I dreamed of owning a home in, and seeing a for sale sign in just about every yard.

And I was fortunate. At that point I had no debt (I had just paid off the last CC), and while I lost a couple of jobs during the Great Recession, I was only out of work for maybe a total of 2-3 months during the entire time. At the beginning of the recession I was laid off, and got another job across the street two weeks later before the warn period ended. So I was actually collecting two paychecks at once, and then the 4 month severance check came in. It all went right into the savings account. When a job ended, I worked hard at getting another so I wouldn't eat into my savings. I actually had friends not work for a couple of years and are still paying for it today.

So I was fortunate to have cash at a time when many others didn't.

When I finally pulled the trigger (after 3 years of looking), I nailed an awesome house in a neighborhood I couldn't have dreamed to live in before. 4-2, big backyard, pool, 3 car garage, and the bottom of the V in prices in Feb 2012, when rates were ridiculous. You could argue its a pretty un-mustachian purchase for just me, but it wasn't like I was paying 2008 prices. I paid the same that was within my previous budget. I got very, very lucky.

But I am scarred from watching that recession unfold.  I was on the outside desperately looking in at what everyone else had, and seeing all of the foreclosures and so on left a huge impression on me. The economy is doing pretty good right now, but I have a bad feeling about whats to come in the next couple of years. I have known a few people upgrading to larger homes and setting their mortgages back 10-15 years, or spending lavishly on a new kitchen and so on. I just can't help but think that some of these people will lose what they have in the next recession. So even though I didn't go through losing anything during the last one, I am paranoid about what happened to others happening to me, and it influences many of the decisions I make. It took me so much time, effort, and struggle to get what I have, I don't feel like its just any other house to me. That's probably not a healthy attitude to have either, but I am pretty bonded to it.
« Last Edit: November 21, 2017, 07:25:52 AM by KTG »

Rubic

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Re: For those that lost their homes during the Great Recession
« Reply #13 on: November 21, 2017, 07:27:57 AM »
I was one of the fortunate people who were able to take advantage
of the cheap prices in the aftermath.  In 2010, a newly renovated condo
was available in a great area, but it was difficult to find a bank willing to
provide a mortgage.  I could have paid cash, but found a way to get
a 5-year balloon note with the bank that held the lien, then refinance
on a 15-year mortgage at 3%.  Prior to that, I'd lived in an apartment
for the previous 10 years because local realty prices were so high.

I'm not sure I'll ever see that kind of opportunity again in my lifetime.

boarder42

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Re: For those that lost their homes during the Great Recession
« Reply #14 on: November 21, 2017, 07:30:23 AM »

As for a tiny house, why not save thousands and buy a travel trailer? I don't get it.....?

this x1000 its as if people jumped on this trend to mount a house on a trailer like it didnt already exist.  an industry has optimized the tiny house and been advancing it for years. the travel trailer industry- its like moving 100 years back in the development of mobile living.

boarder42

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Re: For those that lost their homes during the Great Recession
« Reply #15 on: November 21, 2017, 07:33:09 AM »

The solution then as now is to avoid debt, to invest in vehicles that are less subject to inflation risk (equities), and to always remember that life is unstable and there is no security. Be ready at any moment to move on with only what you can carry. Security through bad-assitry and the kindness of family, friends, and strangers.

this is not the solution then as now. Avoiding debt you cannot afford makes sense but simple debt avoidance with today's interest rate environment is seriously overlooking a great asset to wealth building.  .

As greenbacks stated above having more cash available would have helped him not having a paid for house.

slappy

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Re: For those that lost their homes during the Great Recession
« Reply #16 on: November 21, 2017, 07:40:24 AM »
I didn't lose a home, but I bought a foreclosure in 2011.  The previous owners paid $278,000 for it. We paid $161,000. I think it may be worth around $200,000 now.

GuitarStv

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Re: For those that lost their homes during the Great Recession
« Reply #17 on: November 21, 2017, 07:49:16 AM »
Most (not all) of those folks were people who bought ARM's

There's absolutely nothing wrong with adjustable rate mortgages.  As with anything related to finances, it's important to fully understand the repercussions and plan for the most likely and the worst case scenarios.  Using an ARM linked to prime helped me pay off my house years faster and tens of thousands of dollars cheaper than would otherwise have been possible.

kendallf

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Re: For those that lost their homes during the Great Recession
« Reply #18 on: November 21, 2017, 08:08:41 AM »
I didn't lose a home, but I seriously thought about walking away from two mortgages.

I bought a house in 1995, and by 2006 I had managed to refinance a couple of times and owed roughly 1.5x the original purchase price.  No problem, right?  House prices only go up.  I used a cash out refinance and a TSP loan to buy 10 acres of property out in the country for my eventual dream house.  They aren't making any more land, right?  It'll be a good investment!  The property loan was an interest only ARM.  Yes, banks marketed such things..

Fast forward a couple of years and houses up and down my street were being walked away from and foreclosed, the property developer had gone bankrupt, and I couldn't have sold the land for a quarter of what I owed.  I seriously considered walking away from both.  It would've been a smarter business decision than keeping them and continuing to make the payments.  Florida is a "recourse state" though and the banks could've gotten judgments against me for the net loss (not that many bothered during this time).

I was fortunate, though, to be steadily employed, and I just kept making the mortgage payments.  In 2012 I started looking for a project house in an area that we wanted to move to, and in Jan. 2013 I bought our current house for $34,500.  Not a typo.  Renovated it, moved in, renovated and sold our original house, still own the property, and things have worked out just fine.  Taught us some hard lessons on debt and leverage.

talltexan

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Re: For those that lost their homes during the Great Recession
« Reply #19 on: November 21, 2017, 08:11:28 AM »
Most (not all) of those folks were people who bought ARM's

There's absolutely nothing wrong with adjustable rate mortgages.  As with anything related to finances, it's important to fully understand the repercussions and plan for the most likely and the worst case scenarios.  Using an ARM linked to prime helped me pay off my house years faster and tens of thousands of dollars cheaper than would otherwise have been possible.

A common misconception is that the ARM product caused a lot of these foreclosures. But most of the ARM mortgages became delinquent during the TEASER rate period. It wasn't the rate reset that screwed people. It was buying more house than they could really afford, only to have the value of that house decrease.

GuitarStv

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Re: For those that lost their homes during the Great Recession
« Reply #20 on: November 21, 2017, 08:18:37 AM »
Most (not all) of those folks were people who bought ARM's

There's absolutely nothing wrong with adjustable rate mortgages.  As with anything related to finances, it's important to fully understand the repercussions and plan for the most likely and the worst case scenarios.  Using an ARM linked to prime helped me pay off my house years faster and tens of thousands of dollars cheaper than would otherwise have been possible.

A common misconception is that the ARM product caused a lot of these foreclosures. But most of the ARM mortgages became delinquent during the TEASER rate period. It wasn't the rate reset that screwed people. It was buying more house than they could really afford, only to have the value of that house decrease.

That makes sense.  ARM rates wouldn't go up significantly after the financial crisis . . . the prime rate dropped through the floor.  If you had been on an ARM linked to prime you would have made out like a bandit.

WootWoot

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Re: For those that lost their homes during the Great Recession
« Reply #21 on: November 21, 2017, 08:26:59 AM »
I've never owned a home. But there was a fellow and his GF who lived next door to us who owned theirs. In 2012, he died suddenly, and she had to leave the house immediately. I'm guessing he didn't leave it to her, or if he did, she couldn't afford to pay the mortgage. We later found out she passed away a year later.

A bank owns the house, and pays a service to take care of the lawn and shovel snow. The pipes were stolen at least once and replaced at the bank's cost. There's never anyone looking at the place (potential buyers, I mean), never any For Sale signs on it, nothing. It just sits there. Another (troublesome) neighbor has several junk vehicles parked on it. We've tried to reach the bank (through its attorney) to complain about this, and were shut down by a secretary with the personality of Cerberus.

A bit off track, but can anyone explain to me why they don't seem to want to offload this property? How can it be worth more to them to have it just sit there? A write off?

Krolik

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Re: For those that lost their homes during the Great Recession
« Reply #22 on: November 21, 2017, 08:32:43 AM »
'Big Short' is a really good movie about housing crisis in 2007 and how and why it all happened.

Greenback Reproduction Specialist

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Re: For those that lost their homes during the Great Recession
« Reply #23 on: November 21, 2017, 08:35:58 AM »
A common misconception is that the ARM product caused a lot of these foreclosures. But most of the ARM mortgages became delinquent during the TEASER rate period....
Hmm, I didn't know that.

Bateaux

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Re: For those that lost their homes during the Great Recession
« Reply #24 on: November 21, 2017, 08:36:40 AM »
Own your home.  With the potential for loss of deductible home mortgage interest loans really don't make much sense.

kendallf

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Re: For those that lost their homes during the Great Recession
« Reply #25 on: November 21, 2017, 08:37:22 AM »
That makes sense.  ARM rates wouldn't go up significantly after the financial crisis . . . the prime rate dropped through the floor.  If you had been on an ARM linked to prime you would have made out like a bandit.

My interest only ARM I mentioned above had an initial rate of something over 7%; in 5 years it reset to a 25 year amortized ARM tied to the LIBOR.  My rate has been in the 2.75% to 3.1% range for the past 7 years or so.  I'm hoping the property value will recover before the interest rates go up significantly, which looks promising right now.

MayDay

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Re: For those that lost their homes during the Great Recession
« Reply #26 on: November 21, 2017, 08:39:49 AM »
We didn't actually foreclose but we wished we could have at a few points.

We bought a house for 260k with an 80/20 mortgage. We had a series of layoffs during the recession. We could still avoid the house fine as long as one of us was working. But eventually we had to relocate to stay employed. We sold the house for 200k in 2012. A couple years later it sold again for 280. That burned. We had busted our asses for 7 years to pay down the 20% mortgage and it was gone in the blink of an eye. At least we didn't have to write a check when it sold.

Now we just bought another house in the same neighborhood for 335k. Prices went up a lot since we sold in 2012. We put 20% down and are both employed. Again we'll be fine as long as one of us is employed. If we both get laid off we would have to sell if we didn't find new jobs within 6 months maybe- unless we wanted to tap retirement funds. I think the odds are very low that we both get laid off but of course it is possible.

Iceplant18

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Re: For those that lost their homes during the Great Recession
« Reply #27 on: November 21, 2017, 10:34:27 AM »
I came really close to losing my house in 2009/2010.  I bought my house in 2004 during the bubble and my house still hasn't recovered in value.  In my case, I was too stubborn and unwilling to walk away from the house because I had spent 5 years saving up 100K for the down payment.  Sunk cost fallacy.  Fortunately I was lucky enough to have the opportunities to make the necessary sacrifices and keep my house.  I chose to keep a job I didn't enjoy, take on a roommate, and refinance the house multiple times.  In hindsight I don't know if I'd do it again if put in the same situation.  I'm in a much better situation now due to my efforts and luck, but am seeing friends and family being put into what may be the same situation for themselves if the housing market crashes again.  Best advice I can give anyone is MINIMIZE debt.  That of course is part of the MMM lifestyle, however many people forget too quickly how harmful debt was to everyone just 10 years ago. 

boarder42

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Re: For those that lost their homes during the Great Recession
« Reply #28 on: November 21, 2017, 10:40:27 AM »
Own your home.  With the potential for loss of deductible home mortgage interest loans really don't make much sense.

this is a poor statement lacking a lot of analysis.  in most cases you dont want to own your home today.

paddedhat

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Re: For those that lost their homes during the Great Recession
« Reply #29 on: November 21, 2017, 11:44:38 AM »

As for a tiny house, why not save thousands and buy a travel trailer? I don't get it.....?

this x1000 its as if people jumped on this trend to mount a house on a trailer like it didnt already exist.  an industry has optimized the tiny house and been advancing it for years. the travel trailer industry- its like moving 100 years back in the development of mobile living.
.        As long as you are well aware that most of the output of the RV industry is pure shit, at the moment. The industry is in a bubble and output is at peak+. Unless you stick with a very high end brand like Artic Fox or Bigfoot, and pay at least 150 percent or more of commodity brand pricing , for a quality product, it's a real gamble. I agree with a lot of what you are saying, but caution that you are not going to buy a low end Forest River or Thor product (roughly 85 percent of the market) for $15-20K and have a quality, durable substitute for a tiny house. What you will have is a slammed together POS that will degrade stunningly fast if used full time.

boarder42

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Re: For those that lost their homes during the Great Recession
« Reply #30 on: November 21, 2017, 11:46:59 AM »

As for a tiny house, why not save thousands and buy a travel trailer? I don't get it.....?

this x1000 its as if people jumped on this trend to mount a house on a trailer like it didnt already exist.  an industry has optimized the tiny house and been advancing it for years. the travel trailer industry- its like moving 100 years back in the development of mobile living.
.        As long as you are well aware that most of the output of the RV industry is pure shit, at the moment. The industry is in a bubble and output is at peak+. Unless you stick with a very high end brand like Artic Fox or Bigfoot, and pay at least 150 percent or more of commodity brand pricing , for a quality product, it's a real gamble. I agree with a lot of what you are saying, but caution that you are not going to buy a low end Forest River or Thor product (roughly 85 percent of the market) for $15-20K and have a quality, durable substitute for a tiny house. What you will have is a slammed together POS that will degrade stunningly fast if used full time.

thats why you should buy a high quality used one. since the market depreciates quickly.

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Re: For those that lost their homes during the Great Recession
« Reply #31 on: November 21, 2017, 11:47:33 AM »
Most (not all) of those folks were people who bought ARM's

There's absolutely nothing wrong with adjustable rate mortgages.  As with anything related to finances, it's important to fully understand the repercussions and plan for the most likely and the worst case scenarios.  Using an ARM linked to prime helped me pay off my house years faster and tens of thousands of dollars cheaper than would otherwise have been possible.

Agreed. Nothing inherently wrong to the financially literate group. I had a 7/1 ARM and got an APR about half the going 30 year rate. I knew it wasn't my 'forever' house. In fact, I was on a 5 yr plan. It ended up taking 6 but I built that into my slush time with the ARM (instead of a 5/1). I only bought at 2x my income with 20% down, so it was a good financial deal for me.

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Re: For those that lost their homes during the Great Recession
« Reply #32 on: November 21, 2017, 02:58:14 PM »

As for a tiny house, why not save thousands and buy a travel trailer? I don't get it.....?

this x1000 its as if people jumped on this trend to mount a house on a trailer like it didnt already exist.  an industry has optimized the tiny house and been advancing it for years. the travel trailer industry- its like moving 100 years back in the development of mobile living.
.        As long as you are well aware that most of the output of the RV industry is pure shit, at the moment. The industry is in a bubble and output is at peak+. Unless you stick with a very high end brand like Artic Fox or Bigfoot, and pay at least 150 percent or more of commodity brand pricing , for a quality product, it's a real gamble. I agree with a lot of what you are saying, but caution that you are not going to buy a low end Forest River or Thor product (roughly 85 percent of the market) for $15-20K and have a quality, durable substitute for a tiny house. What you will have is a slammed together POS that will degrade stunningly fast if used full time.

thats why you should buy a high quality used one. since the market depreciates quickly.


The thing that strikes me odd is I have yet to see (at least on any of those shows) where the fronts of them have any protection at all to even go down the highway.  Nothing like a big flat wall usually made of wood to get hammered on. I have seen a little bit of Stainless on the bottom but thats it.

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Re: For those that lost their homes during the Great Recession
« Reply #33 on: November 21, 2017, 03:46:30 PM »
We bought a home in aug 2008. Should have been able to see market trends, but I was young with a young kid and assumed prices would go up forever. Fast forward to 2012 and my employer is folding due to mis management. Layoffs are coming. We have watched 50% of our street foreclose, and know offhand that there is no market for our home even if we took a $125k loss (on a $240k property). We explore short sales but the bank won't work with us. The rental market would have put us $600 in the hole every month. We decide to strategically default and live in the home mortgage free for 5 months. We move, and the home finally forecloses.
It's been 5 years now and we were finally able to get a FHA mortgage again. Put down 20% and definitely bought way less house than we could have afforded.

The lesson I learned was to really explore the market and what's going on politically. When we bought, we bought at the very bottom of the market, and I suppose we shouodn't have been able to qualify.

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Re: For those that lost their homes during the Great Recession
« Reply #34 on: November 21, 2017, 05:48:39 PM »
I know someone who bought the new house before the old house sold right as the market crashed. Lesson learned don't close on the new house unless the old house sells first. I also know people who lived in their houses without making a mortgage payment for over a year, or even rented them out and collected rent while not paying the mortgage. You needed cash to buy the good deals when the market crashed here. Lesson learned "cash is king" .  Damn I wish we could have bought some rentals in 2008/2009

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Re: For those that lost their homes during the Great Recession
« Reply #35 on: November 21, 2017, 05:55:01 PM »
Most (not all) of those folks were people who bought ARM's

There's absolutely nothing wrong with adjustable rate mortgages.  As with anything related to finances, it's important to fully understand the repercussions and plan for the most likely and the worst case scenarios.  Using an ARM linked to prime helped me pay off my house years faster and tens of thousands of dollars cheaper than would otherwise have been possible.

Agreed. Nothing inherently wrong to the financially literate group. I had a 7/1 ARM and got an APR about half the going 30 year rate. I knew it wasn't my 'forever' house. In fact, I was on a 5 yr plan. It ended up taking 6 but I built that into my slush time with the ARM (instead of a 5/1). I only bought at 2x my income with 20% down, so it was a good financial deal for me.
ARMs were kind of a trap 10 years ago before the housing collapse. Many people got them.assuming they would be able to sell their house at a profit before the ARM readjusted to a higher rate (or a big balloon payment) but found themselves severely underwater once the crash happened and house prices dropped by 50% or more. So big monthly payment increases on underwater mortgages where common. And no way yo refinance with no equity or possible unemployment.

It's kinda risky to buy a house you can't afford on the gamble that you'll be able to sell it for more than you bought it for.  The ARM wasn't really the trap, the greed was.

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Re: For those that lost their homes during the Great Recession
« Reply #36 on: November 22, 2017, 07:23:05 AM »
There is another kind of mortgage--an "Option ARM"--that was a big problem, and I suspect it is now illegal.

The "Option" is to pay LESS than the accumulated interest each month. Typically a minimum payment was required of 2/3 or maybe 4/5 of the interest accumulated. For example, you could buy a $500,000 house with $0 down, then only make monthly payments of $1,500 during the first two years, while your loan balance would increase to $520,000. Someone with a job that paid $80,000 annually might be approved for a loan like this.

People who thought their homes would rapidly increase in value used these mortgages to purchase them thinking that the appreciation on the house would outpace the interest being added to the loan balance. If the house increased in value to $600,000 during those two years, then you've gotten $80,000 in equity out of thin air.

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Re: For those that lost their homes during the Great Recession
« Reply #37 on: November 22, 2017, 08:07:09 AM »
I know someone who bought the new house before the old house sold right as the market crashed. Lesson learned don't close on the new house unless the old house sells first. I also know people who lived in their houses without making a mortgage payment for over a year, or even rented them out and collected rent while not paying the mortgage. You needed cash to buy the good deals when the market crashed here. Lesson learned "cash is king" .  Damn I wish we could have bought some rentals in 2008/2009

I had a deal to sell my old residence in march 2008 fall though the week before I closed on my new place.  I went through with the purchase.  Finally sold the 2008 place last year after being a reluctant landlord.  I was 100% fine because I made sure I could afford both houses at once their entire time and actually came out slightly ahead when the 2008 place was rented.  (there were legal issues with the property that make renting a PITA which made it not worth it to keep around.)

 

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