Profile picture for natewong

Sell now or in two years?

I have an ARM that will reset in about 2 and a half years. We are well underwater and our bank won't refinance unless we get 80% LTV. I am fine with the current payments. It seems that a lot of experts believe that the value of prices will go down this year which I agree. My question is will the values come back up in my area in 2 years where I can sell for around the same amount today and push off having to move this year versus in two years or do most experts feel that it'll go down and flatten and not rise for quite some time (after it resets)?
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January 14 2010 - North San Jose
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Answers (25)

It would be worth a call or two for a Realtor to come and give you a Comparative Market Analysis so you know where your at, times are
changing and prices going up. It is worth getting a expert to help!
  Good luck and a good Relator can all so help direct you to get
the help you need.
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May 27 2013
Several folks have suggested you do a short sale.

Be cautious with this advice - you said you are fine with the payment.

A short sale is an alternative to foreclosure. If you are able to afford the payments, a short sale is not an option.

If you simply stop making payments (when you can afford them) to generate a delinquency on your mortgage and complete a short sale, this is Mortgage Fraud (a crime).
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May 27 2013
I would consider a short sale if you are underwater by at least 20% and you need to sell now.  Homes prices may be back up some in two years, but were in a slow recovery and unfortunately for many people they may not have enough time.
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November 02 2012

4 million mortgages are in delinquency currently, FNMA holds 26% and FMAC holds 11% of delinquent notes.

When you are delinquent, a short sale is a dignified alternative to foreclosure.  Effective November 1st, FNMA and FMAC have streamlined the short sale approval process for servicers in an effort to help stabilize the housing market.  FNMA and FMAC mortgage backed securtities no longer require the mortgage insurers approval to sell for less than owed when the borrower meets the investors guidelines.

FNMA and FMAC would like not to see any more REO's.  Folks that are seriously delinquent need to reach out for help to request a short sale.
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November 02 2012
If you are well underwater, you might want to look at doing a short sale.  Banks are working with sellers more so now then they ever have.  Good luck.
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November 02 2012

Selling a house in maximum profit needs deep market analysis. Real estate sales peak in few months and it's always good to sell your property in peak season. I would suggest you to consult some professional expert for the same. 

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November 02 2012
If you are 'under water' it might be a good idea to hold on.  However, if you are looking to buy a step up home now is a great time to make a move.  The real consideration is what are you future goals.  If you plan on staying in the home you might try a modification with the lender.  Suggest to them that you just want to lock the rate in for the long-term. 

While they may be reluctant to do a complete refinance, many ARMs give the borrower the ability to lock the loan in.  The rate will surely be higher than current fixed rates and will be higher than the rate you are currently at, however, if you feel rates are going to increase drastically locking in a rate now could make a lot of sense.
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February 17 2011
No one is able to predict what the future will bring in the Real Estate market. Do seek the advice of a Real Estate attorney as soon as possible who will guide you and go over your contractual obligations with your lender and state laws. It is always better to be proactive rather than reactive to any situation. 
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February 15 2011
Profile picture for SteadyState
In two years it will be difficult. Remember you will be on the hook for 10% in closing costs (~6% commission and 4% miscellaneous fees).
Thus if you bought at $750K and it's value is now $500K. You will need to sell at $770,000 to break even (providing you did not put additional major money into the home like roof replacement, replace heater/furnace, etc.) But you do have two years to build your career, same money, and be financially in a better state so that you do not need to sell.
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February 15 2011
If you are making the payments OK now and don't have to move, I say stay. No one really knows what the market will be in a couple years. I'm certainly not a psychic, but it seems like the current administration will be doing all it can now to help the housing market and keep rates down. Our phones are ringing more and interest is generating on competitively priced homes. When you are ready to sell, speak with a Realtor well known in your area with references and spiff up & shine your abode to stand above all the rest.
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February 15 2011
How do you feel about moving?  When the loan resets will you be able to afford the payments?
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February 04 2011
don't count on the value rising fast enough for you to hit your 80% when you readjust... you may want to take advantage of the short sale process right now ... then in a couple years reenter the market... you taxes will be reduced, payment about the same, because home is lower...etc.. you need to see you account and a good real estate agent who understands the upsidedown market and WORKS short sales.. it is a speialized market
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February 04 2011
Moving is a hassle, no doubt.  My opinion is that housing prices will continue to decline, but there is a possibility new mortgage programs may become available that will assist with loan less than 80% LTV.  Otherwise, you will either face higher payments or a short sale in two years.  If I am wrong about housing prices, AND I HOPE I AM WRONG, then you may be ok due to values increasing and putting you at 80% LTV.  Again, moving is a complete hassle unless you are getting something out of it. 
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January 19 2011
The market in San Jose will be at the level the job market can support it.
No economists are forecasting a downturn so far as Silicon Valley goes.
The bottom of the price trough was Q2 2009. The home default rate has radically improved quarter by quarter (Q2 2009 was up to 6.5%; Q4 2010 was down to 2.5%).

Many employed home owners are underwater and can not refi. Few plan to relocate and most plan to stay put. The valley was that way before. After the typ 5 year ownership seller relocated and made $1K or lose some. The speculation and lender craze lead home sellers to think they have to come ahead. The longer one holds on their homes the less likely they will feel the pinch as you have experienced.

Here are the stats for you to contemplate:
Profit in selling homes(CA)
1993-97 $  40K
1998-99 $  60K
2000-01 $100K
2002     $145K
2003-07 $200K+
2008     $100K
2009     $  42K
2010     $  35K
2011     ?

Those who gave up typ sell their homes via a SHORT SALE.They then try to purchase again some sooner than you think. I got people sold last year and their credit score from short sale did not mar and lenders are now interested in offering mortgage....

Hope you make a good decision,
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January 19 2011
Profile picture for the_country_hick
There are at least 3 more years before a bottom in housing arrives. It could be 5 or more depending in many different circumstances that may or may not happen.
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January 18 2011
In two years the market may have gone up some, but you wont really know until two years has passed. If you can afford to stay in your home and don't have any urgent reason to move, than I would personally just wait to see if the market gets better over the next two years. I think the market will start to go back up and that in two years or so we'll be in a better place than we are in now.
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January 18 2011
My opinion is this: If it's not broke, don't fix it! If you enjoy your home, can afford your payments and have no desire to move then I would stay put. If you sell right now than you would be looking at a short sale, whether or not your mortgage company would approve it is the question. If home values are still down in two years you're looking at the same scenario as today. But, they could also go up therefore allowing you to refi. Nobody knows where our market will be in two years so considering that you are already underwater than you have nothing to lose by waiting.
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January 27 2010
Profile picture for cubbybumpken
We want to sell our home at 12781 Eastbrook Dr. Port Orchard wa. to the Reno Nevada area.
We have time and do not need to sell as we are not upside down in our loan, so I just wanted to know if it would not be better to wait and see what our home will be worth in later 2010 or 2011, and when we do sell is it better if we listed it in the spring or summer rather than winter?

Thanks,
 Juanita Figueroa
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January 15 2010

You have provided too little information for all the "experts" on Zillow to offer real and constuctive advice. YOu do only have the four options mentioned above plus the option of remaining in the home.

You should seek the advice of a financial planner and attorney. You need to know what your actual net worth is today, what you project it will be in a year and then in two years when the ARM adjusts. While a foreclosure is terrible in the short term, a continued decline or accelarated loss of net worth may be harder to overcome than a few years without the ability to buy shelter. In many of nor most cases a short sale is no better for your credit rating than a foreclosure.

An attorney will guide and advise you according to your contractual obligations and state laws. You should begin today rather than put off what is going to be uncomfortable before it becomes unbearable.

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January 15 2010

Are you happy with where you live? You can afford your payments now, but can you afford them after the rate resets? If you plan to be in your home for many years, prices will go back up. I know it is upsetting to be upside down, but if you like your location and do not have to move, maybe an option is to wait it out. Of course, if you can not afford your payments after the rate resets, your options are as the others have said. Check to see if you can do a loan modification
http://makinghomeaffordable.gov/ This site will guide you. Don't pay someone to do the modification for you, work with the bank yourself. The website will help you determine if you qualify.

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January 15 2010
Grace,
I don't understand what you mean in regard to "you need to be able to afford te monthly payments for 2 years before you can ask about the value"? He only really has 4 options if he's upside down, short sale, loan mod, deed in lieu of foreclosure or just foreclosure. 
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January 14 2010
Are you current on your monthly mortgage?
If you are not make the monthly mortgage payment, then you need to look the other options. There are many options but I can tell you that you need be able to afford the monthly payment for 2 years before you can ask about the vaulue.
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January 14 2010

Nate,

The future is speculative so that's what you get back - speculation. Most economists feel we're at bottom but the rate of growth, the shape of the curve, is dependent on many variables.
 
HopeNow.com, 888-995-4673, provides free qualified counsel and guidance for folks in mortgage distress.

If short sale turns out your best option read this paper that explains the process and bookmark the page, part of a superb free online real estate primer.

Best fortune... legislation and regulation are in flux, shoot everything is, so keep at it.


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January 14 2010
Profile picture for workabee
Prices will not come back up in 2 years so sell short now or walk.
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January 14 2010
If you are upside down and you owe more then the house is worth you should do a short sale.  In 2012 the   MORTGAGE DEBT FORGIVENESS ACT OF 2007 or MORTGAGE DEBT RELIEF ACT will expire and you will be liable for the taxes on your property.  So you will be 1099 at the end of the year and you will have to pay taxes on the amount of money the bank let you out of. Of course this only applies to your primary residents under 2 million dollars.  Investment properties are not covered under this bill.
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January 14 2010
 
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