I suggested he sell and take the loss, as it will take years before he gets that equity back via appreciation. Saving the monthly mortgage payment alone would recover the lost cash in as little as 10 months, not to mention the fact of instantly improving his quality of life with the extra cash in his pocket. I also suggested he could purchase a similar home in foreclosure at a discount, thereby getting a more manageable monthly payment and regaining his lost equity sooner, if not instantly. Plus, there would be the additional savings in interest he currently looses on his over-inflated mortgage.
So, I see the logic in your idea. The cash you put down & the equity you had on your current home is "gone" and may take years to recover. If you can stomach the risk & follow through, I believe you'll be in a better financial position with greater upside potential sooner as the market finishes its correction. Plus, if you get a good deal on your new home, your mortgage payment will be lower, providing you with additional monthly savings, allowing you to keep more of your income. Do the long math and you might be surprised at how soon you'll regain your loss.
I personally would try and rent the house for what you pay for in rent and maybe even do a lease to own type of deal with the old house.
bottom line...get out....can't say it any more clearly than that.
Thanks to all for the answers. We were trying to move for a better career opportunity, but the housing situation is so bad right now, we had to pass.
John A. Brassner, MBA, Realtor
Windermere Summerlin Real Estate
Cell Phone: 702-808-9816
10777 West Twain Ave, Suite 105
Las Vegas, NV 89135
I assume you would not walk on your current home and just sell it at current market value or keep it to rent out? If so ... I would say Yes. Keep in mind you have to look at it as a long term investment. Don't expect instant equity in the foreclosed or SS purchase. Banks want to recoup as much of their money as possible. A lot of the foreclosed properties have been trashed by disgruntled owners. These are where you can possibly get your best deal, but be prepared to do some work fixing them up.
Again ... find a good local Realtor to help you and advise. You will need to get good comps to know that what you are buying truely is a "Good Deal."
If you need some recommendations for Realtors let me know.