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> Maybe I don't understand how things work, but if you plan on enjoying and living in the house, does the house value matter except for property taxes? I bough

> Maybe I don't understand how things work, but if you plan on enjoying and living in the house, does the house value matter except for property taxes? I bought a house to have stable "rent" You could end up being underwater on your mortgage, which could be a bad thing if other aspects of your financial situation deteriorate.

cavisne 4y ago
In California & Washington mortgages are non-recourse, ie they are secured by the property itself and nothing else. So if your financial situation deteriorates to the point where you are forced to foreclose, you lose the equity in the home, but your other assets are protected.
- leereeves 4y ago
  But even a non-recourse foreclosure tanks your credit rating and makes it difficult to rent or buy another home, right?
  - dragonwriter 4y ago
    > But even a non-recourse foreclosure tanks your credit rating and makes it difficult to rent or buy another home, right? Been through essentially that (it was actually a short-sale in a non-recourse state, not a foreclosure, but in most effects the two are pretty similar.) So, yeah, because we didn’t rent the new place immediately when we realized that there was a problem but after some period of nonpayment (but before the short sale was finalized), we had to find an individual landlord who managed property directly rather than one managed through a management firm that ran applicants through a hands of screening process before even looking at them (who we found, before the apartment was publicly listed, through an real estate agent who we first contacted because they had listed their house for rent and it was at the high end of what we were looking at, and who we also ended up working with on the short sale.) Once financial circumstances turned and we were in the market to buy again – within the 3 year period of ineligiblity after a short sale for an FHA loan – we had relatively little problem finding acceptable financing, though we paid slightly higher (but still tolerable) rates, and were able to refinance into better rates a couple years later.
  - surfaceofthesun 4y ago
    Yes. This is anecdotal, but I saw relatives go through foreclosure in the GFC, then get approved for a different (larger) mortgage 5-6 years later.
chrononaut 4y ago
Which is really influenced by how much you are financially leveraged, and less so about whether a home is underwater or not. In a case where capital is needed, if I "put 10% down on my primary residence with remaining capital in more liquid assets and the home becomes underwater" can often be a better situation than if I "put 40% down on my primary residence with little capital in liquid assets and the home decreases in value by 20%".
dragonwriter 4y ago
> You could end up being underwater on your mortgage, which could be a bad thing if other aspects of your financial situation deteriorate. Being underwater on your mortgage is, in and of itself, not too bad. If you also can’t pay the mortgage, that’s bad, because being underwater means you can’t sell the house to get out of it. OTOH, in a non-recourse state, especailly in a bad economy where you are very far from being alone in that situation (which, statistically, is when it is most likely to happen), there’s a sense in which that is more of a bank problem than a you problem.
- adam_arthur 4y ago
  It's terrible if you ever want to move and market rents don't cover the mortgage

cavisne 4y ago

In California & Washington mortgages are non-recourse, ie they are secured by the property itself and nothing else. So if your financial situation deteriorates to the point where you are forced to foreclose, you lose the equity in the home, but your other assets are protected.

leereeves 4y ago
But even a non-recourse foreclosure tanks your credit rating and makes it difficult to rent or buy another home, right?
- dragonwriter 4y ago
  > But even a non-recourse foreclosure tanks your credit rating and makes it difficult to rent or buy another home, right? Been through essentially that (it was actually a short-sale in a non-recourse state, not a foreclosure, but in most effects the two are pretty similar.) So, yeah, because we didn’t rent the new place immediately when we realized that there was a problem but after some period of nonpayment (but before the short sale was finalized), we had to find an individual landlord who managed property directly rather than one managed through a management firm that ran applicants through a hands of screening process before even looking at them (who we found, before the apartment was publicly listed, through an real estate agent who we first contacted because they had listed their house for rent and it was at the high end of what we were looking at, and who we also ended up working with on the short sale.) Once financial circumstances turned and we were in the market to buy again – within the 3 year period of ineligiblity after a short sale for an FHA loan – we had relatively little problem finding acceptable financing, though we paid slightly higher (but still tolerable) rates, and were able to refinance into better rates a couple years later.
- surfaceofthesun 4y ago
  Yes. This is anecdotal, but I saw relatives go through foreclosure in the GFC, then get approved for a different (larger) mortgage 5-6 years later.

chrononaut 4y ago

Which is really influenced by how much you are financially leveraged, and less so about whether a home is underwater or not. In a case where capital is needed, if I "put 10% down on my primary residence with remaining capital in more liquid assets and the home becomes underwater" can often be a better situation than if I "put 40% down on my primary residence with little capital in liquid assets and the home decreases in value by 20%".

dragonwriter 4y ago

> You could end up being underwater on your mortgage, which could be a bad thing if other aspects of your financial situation deteriorate. Being underwater on your mortgage is, in and of itself, not too bad. If you also can’t pay the mortgage, that’s bad, because being underwater means you can’t sell the house to get out of it. OTOH, in a non-recourse state, especailly in a bad economy where you are very far from being alone in that situation (which, statistically, is when it is most likely to happen), there’s a sense in which that is more of a bank problem than a you problem.

adam_arthur 4y ago
It's terrible if you ever want to move and market rents don't cover the mortgage