Shackle, Sweet Shackle

In 2001 I bought a townhouse. The plan was, based on conventional wisdom of the time, to be a ‘stepping stone’ to a single family dwelling more consistent with what I imagined I would raise my kids in. Given that I never honestly expected to own a house, I was pretty excited about all this. Given the trajectory of real estate values at that time, it seemed reasonable I might be able to afford a modest home somewhere in the area. The operative word being modest.

In 2007 I put the townhouse on the market. If I managed to get something close to what units in the complex were going for I would have been in pretty good shape. Able to buy a fairly decent single family house in an area we liked better. About two weeks after the house got listed, the mortgage crisis started to break. That was August of ’07. The realtor convinced me to keep the house on the market until February of 08. When we finally took it off the market, I wondered if we would even be able to get enough to cover the mortgage. From there, the prices of units in the complex went into free fall. Now, units purchased for $400,000 with $100,000 in upgrades are selling for half that in short sales. Most of the buyers are investors who rent the units out which further depresses the property values in the complex.

Compared to many people, I am fortunate. I have a good paying, stable job so I can make my payments. The house is big enough that my family can all live there. It is a good thing we are a close knit family, 1100 square feet is not a lot of space for four adults. No garage.

I made certain that I bought only what I could afford. When I refinanced in 2004, the mortgage brokers were flogging Adjustable Rate Mortgages (ARM). I had a hard time finding someone who would put me in a 30 year fixed rate mortgage. However, at the time consumers were being told that interest rates were the lowest they had been in 40 years. It made no sense to me to get an ARM which would put me in the position of having to refinance again, presumably when interest rates were no longer at their lowest. Little did I know that the rules were being manipulated.

My frustration is this. I played by the rules and with integrity. I sought wise advice and followed it. Now, I am stuck with a property I no longer want, making rather huge payments for a property that, at least for the foreseeable future, will never be worth what it is costing me. My integrity will not let me miss payments when I have the money to make them but the majority of government programs to assist homeowners require that the homeowner be at risk of foreclosure. The sum of the mortgage, taxes, insurance and home owner association fees exceeds potential rental value. Thus, I am shackled in one of the most expensive areas in the country.

So, I’ve owned a house for 10 years and I regret almost every year of it. Had I rented for the same period I would have either been able to live in a significantly better dwelling or had a much larger expendable budget. After 10 years of making payments that were almost double what I would have paid to rent the same place, I really have nothing to show for it except a mortgage balance that is greater than the value of the collateral. I am really ready to move on with my life. I would like to relocate and do other things. Mind you, I am not looking to move up in life. Most people would consider what I want to do a move down. But home ownership, the very thing that everyone told me would help me achieve my dreams, is the very thing that has me locked into a place, a situation that I find depressing and stressful.

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