Chris

Wow, great tutorial on how to escape from a mortgage without going bankrupt. - Wed May 14 2008, 21:18

Your home is worth 425,000 TODAY. Tomorrow it may be worth 325,000, so if you hang onto, you'll be that much more in the hole.

Only two things will save you from this declining home value problem you're in. The first is that rapid inflation that drives down the value of a dollar, thereby undermining the purchasing power value of the loan. In this scenario you earn more dollars, so does everyone else, but the loan's principal is fixed so in effect it goes down. While it might appear that this is happening now, with costs going up as they have, but it isn't since by and large people aren't actually earning more money.

The second scenario is that there's some kind of comeback in the San Diego market. Ask yourself, how likely is this? San Diego doesn't have a very deep well of industry behind it, and wages there aren't much different than the rest of the country. Current real estate prices, however, are two to three times what they were five years ago. It took a historically loose credit bubble to drive the prices up to where you bought, and that bubble has now burst. It won't be back again soon.

So, having said all that, it's probably in your interest to let the property go and reduce your cost base immediately. I don't know what industry you work in, but if it's affected by the coming recession you might be looking at layoffs, and it would be better to have money in the bank for poor credit then, than to be saddled with a huge debt and no job. - Thu May 1 2008, 01:55

I wouldn't buy into a Mello Roos property unless it came at a very substantial discount to an equivalent property in a non-mello district. - Thu May 1 2008, 01:30