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upside down mortgage?

we are re-financing.fortunatly we have been living here for 20 yrs so we never lost any money.our town has an open data base.we have a 3 yr old cul- de- sac down the street.there are mcmansions.they bought them for a small fortune. so iwent on the data base and these houses depreciated about 100.000$...some more....what does this mean to them.what do you do now?they really cant sell the houses?so im not really sure what this means?alittle worried.....

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Asked by cleo1977 at 12:31 PM on Mar. 2, 2010 in Money & Work

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Answers (4)
  • It doesn't mean anything unless they need to sell or can't make their payments. The investment they made won't be as good at they were expecting. My house is also worth about 100k less than it was 4 years ago, but since I bought it 23 years ago and I'm not trying to sell it. It doesn't matter in the slightest. Ask me again when I am ready to retire to a sunnier state.

    Answer by Anonymous at 4:41 PM on Mar. 2, 2010

  • This is just how i feel about these situations.......People shouldn't even be dwelling on the fact that their house is worth less now than it was a few years ago. They agreed to pay that price for the house, and since they did agree to it, they should just keep on paying their mortgage every month like they have been. That's the price they agreed to spend! So houses are selling for less, that's the risk you take. I lost 30% of my retirement savings when the stock market crashed....that's the risk I took. I'm not happy about it, but I will keep hanging in there waiting for my investment to recover. My house is also worth about $100k less than it was worth in 2007 (and it's not a mansion or anywhere close). Am I bummed? Not so much because I bought it at a price that we could afford the monthly payments and I don't plan on selling it anytime soon. So it really should only be a problem if they want to sell the house.

    Answer by Anonymous at 5:27 PM on Mar. 2, 2010

  • The only time that comes into play is if you are selling or refinancing. If you plan to grow old in your home, it doesn't matter at all. If you make the payments and hopefully can put alittle extra on the principle then you will pay it off sooner and the situation will take care of itself.

    Answer by CorrinaWithrow at 6:24 PM on Mar. 2, 2010

  • Selling or refinancing aren't necessarily the only concerns. If you house has depreciated enough and the bank realizes that there is no equity holding the loan, they can call the loan. It doesn't happen often, but it does happen.
    They will be able to sell if they need to, there are just a couple of different scenarios. First, they bring money to the closing table to make up the difference between what they owe and what they sell it for, minus any closing costs. Second, they can try to get the bank(s) holding the mortgage(s) to agree to a short sale. This means that the bank agrees to take a loss on the loan in order for it not go into default. If they don't need to sell, and the bank doesn't realize that they have no equity, there won't be a problem, though.

    Answer by indymom22 at 10:00 PM on Mar. 2, 2010

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