I can afford my House, but i’m upside down; Should I sell?

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Hi all,
I’ve tried to do a loan-modify, but the banks don’t want to listen to me because on paper I CAN afford it. The price owed is 520k and it’s now worth in the neighborhood of about 300k. I’m locked for 30yrs and have a good rate on the first and the second rate is ok.

I don’t live a lavish lifestyle or have CC debts. But little things like groceries and basic living expenses eat up most my free money. Needless to say, I’m sorta tight. If i have an emergency I have a tiny 401k Investment that I could tap into if need be.

I don’t know much about real estate, I do know that I bought at the wrong time! However, I don’t see the real estate market appreciating in my area anytime soon to reach what I owe on this house. I wanted this house to be a long-term investment and pay off a school loan. But now i’m still stuck with the school loan and an upside down mortgage.

So my question Is:
Even though I can afford it (barely), should I try to get rid of it? Or should I bite the bullet and let it go? Either through a quick sale or something?

Any advice is appreciated.

  1. Reply
    May 3, 2011 at 4:59 am

    Never dip into a 401K plan. You will pay high penalties if you do.

    Is there anything else that you can cut back on that will free up some of your money? Eating out, entertaining, etc. If the housing market in your neighborhood is low, you will lose major money by selling now. I honestly think you should ride this wave that is happening and let things go on for a year. I really believe after the election is over, things will straighten out.

  2. Reply
    May 3, 2011 at 5:14 am

    You will do yourself a favor buy sticking it out until this market improves. I can tell from real experience and as a Realtor, if you don’t have to sell then don’t. You will only find yourself reducing your price over and over for nothing! The buyers just aren’t out there right now. And with the state of the whole frickn’ world economy, who could blame anyone for not wanting to buy anything!

    This will change, it will get better, but you don’t need to add to this problem at this time.

  3. Reply
    May 3, 2011 at 5:54 am

    consider bankruptcy. it will buy you time and save your house.

  4. Reply
    May 3, 2011 at 6:13 am

    You stated that the house was to be a long term investment and it still can be. If you intend to stay there for 15 yrs or so, then you shouldn’t sell. You definitely won’t get your money back in the near future so why take a loss. There really aren’t any buyers out there right now. Did you buy in Miami or Las Vegas?

  5. Reply
    May 3, 2011 at 6:19 am

    Please try and ride it out. Can you get a part time job or how about a roommate? I love the way these lenders say that you can afford it but in reality you can’t. That’s the reason we are in this mess in the first place. Have you tried to renegotiate the student loan?

    Hang on tight, things will turn around.

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