Posted on 04/20/2007 6:27:01 AM PDT by RexTheRunt
Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.
The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.
"Five months later, I lose $100,000," Taylor, a high school teacher, said. "I don't think I can take $100,000 into the stock market and lose it faster."
Such a scenario, known as a short sale, was unthinkable during the real estate boom of recent years. In the course of five months, a person could buy and sell a property and walk away with tens of thousands of dollars. Now, instead of receiving large checks at the settlement table, many sellers are writing them.
"It was unheard of three years ago," said Kevin Connelly, a mortgage banker for Pinnacle Financial in Vienna. "Everyone was doubling their money, and suddenly the tide has turned."
(Excerpt) Read more at washingtonpost.com ...
There is no planet where the laws of economics apply on which you can buy a house at 8x your income and expect to be able to keep it.
What goes up ...
Not sure but from the context of the article I assume it’s in the bubblicious DC suburbs.
I think Virginia, west of DC.
LOL! My sentiments as well.
A high school teacher buys a half million dollar home? Hm. He flunks.
Presumably, his wife had a salary as well, and that’s why after divorce neither can afford to keep the house.
Purcellville has become an outer suburb of Washington DC. Very nice historic town.
It’s crazy that people got wrapped up in the stock, I mean housing, market with such “unconventional” mortgages.
Purcellville is in Virginia, about 40 miles west of DC.
This happened recently to my niece in the Akron Ohio area on a much smaller scale. I think she had to write a check for 18,000 bucks at the closing - and she had owned it for 4 years and did a lot of improvements.
Two days before the closing, scheduled for today, they discovered that they had a prepayment penalty of 2 percent of the price of the home. They will have to take about $28,000 to the table.
I don't get this prepayment penalty thing. How hard has it been to get a mortgage without that? That's one of the first things I insisted on when we shopped for a mortgage, and when we refinanced, and believe me, I am no financial genius.
Virginia suburbs of Washington, D.C.
The only person I have any sympathy for in this article is the woman who had to sell quickly because of a job relocation. If the relocation is with the same employer, and you are valuable enough to them, often you can negotiate compensation for part or all of any real-estate losses you incur - much like reimbursement for moving expenses.
The problem is that when housing starts to tank you can't call your broker and unload it in five minutes.
When I sold my Cisco stock about 1/3 of the way down from the peak I didn't have to pay the broker six percent plus "closing costs" either.
Also, they bought this house last August and 9 months later they are divorcing?! Oooook....
How about this? Don’t make large investment decisions then get divorced less than a year later. They bought the house on 2 incomes and found they couldn’t swing it. Another lady and her husband bought an expensive house then got divorced.
Say married and work out your BS and maybe you both don’t get butt reamed after the fact.
Poorly built homes tucked into any odd sized plot of land available. Seems the developers absolutely have every politician in their pockets. If a tree is standing it must be bulldozed. No investment in new infrastructure, since that would dilute the home density.
In the real world, that $500K+ plus house is worth about $175K.
Glad to be gone.
-ccm
Greedy, myopic dumba$$e$.
Didn’t take a lot to see this coming.
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