Decided to go through with a HARP refinance on my former primary residence turned investment property. Essentially, I will be able to take advantage of historically low interest rates without worrying about the fact that my house has lost 63% of its value (i took a look at comparable sales in the area to arrive at this number).
This opportunity is a blessing as it will allow me to transition out of an interest-only ARM (my plan was to sell the property after i finished my masters - that is not the plan anymore) that is scheduled to reset in 9 months into a traditional fully amortizing 30 year mortgage. My monthly payments will actually decrease by about $50.
Can't bring myself to feel good about this at all. I view this house purchase as the absolute worst decision that i've ever made in my life...and what's worse is the fact that i'm seriously considering buying the mortgage down so that my cashflows will improve. Way to throw good money after bad, J. Nice job.
63% growth will not undo my losses. I would need 165% growth - the equivalent of a 5% compounded annual growth rate over the next 20 years to break even (not accounting for inflation and my opportunity costs). But 5% still seems somewhat reasonable. I don't expect the market for 2bd 2ba apartments in the suburbs of Baltimore and DC to experience such growth, but stranger things have happened.
yeah - i'm in it for the long haul. Not by choice - but i'm certainly in it.
I don't feel like a fool for not seeing that the housing market growth from 2003-2008 was unsustainable. One doesn't really study finance and such things in engineering school. However, I do feel like a fool for not walking away like so many of my neighbors (obviously) did. I would have a poor credit rating - but living on cash for 7 years wouldn't have been so bad.
Psalm 37:21 has been an encouragement to me in this time. Lord help me to be content. Help me to be generous.