Need help or am I just beign greedy?

[Rich G]

Hi,
First off I am a 28 year old stuggling college student who works full time, currently I am a JR Engineer and make decent money(not sure if I can post exactly but its above 45k)

Anyhow about 3 years ago my parents had a seperation which forced me into movign out on my own, ingrained in me from child was that rent was silly and you should own a house.. so I didnt even consider rent or look at the market and I went out and bought a house. Not really considering my financial situation or the location. When I was buying the only area that had affordable housing was an area called Port St Lucie, so of course thats where I bought.. For example the condos in Palm Beach County were going for 200k, and the houses in P.S.L were going for 200k so it seemed like a no brainer at the time. I never really considered what kind of toll the 45mile trip to work and 85 mile trip to school would have on me and my car, gas etc.

Fast forward 3 years housing prices are dropping rapidly and gas prices are soarign rapidly, meanwhile the salaries are climbing very slowly. When I bought my house the mortgage company financed me 55% of my income (apparently 45% was the norm max, but my credit score was 790ish so they let it slide). Luckily I live with my G/F because if I didnt I wouldnt be able to make payments...

My loan is a Fixed 30 year loan so my payments are set, however I see this house a huge financial burden.

Here is my breakdown of what it costs me to live where I am at(I wont include electricity and stuff because that stuff is gonna be roughly the same whereever I go)

Monthly
$1500 Mortgage
$400 Gas
(does not include car repairs, tires, etc etc)

Now I could leave my house and rent 3 minutes from work for
$1000 Rent
$100 Gas

So as I see it I could potentially save 5-8 hundred dollars per month, on top of that I have a 20k equity line of credit that I could cash out (I know, its a shame it appraised for much more than I payed....)

So if I could force myself to save $500.00/Month + the 20K after 7 years I could have 62k in the bank (not including interest) If I took the 20k and put it in a 5% CD it would even more

I dont see how its financially smart to stay in my house, best case scenario, my house may appraise for 120k in 7 years

Currently it appraises for 100K(and dropping), I paid 195k and owe 170k

So in 7 years I could have
62k in the bank + recovering credit score
or
little to nothing in the bank, a broken car but a good credit score....

+ if my g/f leaves their is no way I could ever pay for the house, and I might lose my opportunity to cash out my equity line because I have heard they are closing them left and right.

I know morally walking out is wrong, but in my caseit seems like the right thing to do... I cant sleep at night thinking abotu it and I need advice.

Thanks
Rich

[schwefls]

Welcome to our forum Rich:

I hear ya and I am sorry you are in this situation. I wanted to stop in say hello, welcome you to our forum and assure you..you are not alone. Shortly someone will be stopping by with some advice/suggestions. In the interim please hang in there. We are here for you.

[jjuhasz]

Honestly, I understand where your coming from. I have found myself in the same boat. I purchased my home 17 years ago and refinanced about 6 years ago to do some home improvements. My loan was also misrepresented to me as well. My interest rate after the second year goes up annually and the mortgage is now becoming unaffordable. I requested a modification for a fixed rate at 5.5% and the first response was no. I had accepted this defeat and had decided that it was time to give up my home. The homes in my area that are comparable to mine are now selling for what I paid for mine 17 years ago. The neighborhood is also not the neighborhood I purchased into 17 years ago. It has been on the decline for about the last 5 years. After I made my decision they contacted me about a week later and and said they would give me 8% fixed for the balance of the note. I thought about it for a day or two and decided no, now is my chance to get out. They had already told me they would accept a deed and lew (?) and thats what I intend to do. I will never sell this house for what I owe on it given the decline of the area. It sadens me as I have raised all my kids here but for what I'm paying I can live in a much nicer area.

I am in the real estate business as an inspector and I have seen homes that have been taken from home owners and it saddens me. I have performed almost 100 inspections this year and about 90% of them have been forclosed homes. The properties are selling for 10's of thousands of dollars less than they sold for just 3-5 years ago. I recently heard that they expect the home values to drop another 20-25% before this mess is over. If you ask me, bail and wait until the values hit bottom.

Good luck.

[Rich G]

I am seriously thinking about just walking out, it sickens me to know I am so far in the hole...

[Moe Bedard]

Rich,

We can not advise you one way or the other on this forum..........this is a personal decision for you.........and only you can make it.......it is a very serious decision that has certain legal and taxable ramifications.........so you really should consult with an attorney and a CPA before making any decisions.......

Rich, what state is the home located in?

Daniel

[Rich G]

Florida

I understand you guys cannot recommend or make the decision for me, but I was hoping you guys could give me the ups and downs of my options.

[Moe Bedard]

Rich,

Giving the ups and downs of the options that you have requires knowledge of the ins and outs of the foreclosure laws in Florida..........

Florida Foreclosure Law

I agree with ***, particularly since Florida seems to be one of those states where lenders are free, assuming they follow the processes, to proceed towards obtaining a deficiency judgment. Talk to a lawyer well versed in real estate foreclosure and debt collection practices before making a decision.

Take care,

Daniel