# Mortgage renewal ....



## gt45 (Feb 6, 2012)

Quick up date. Im really up side down on my mortgage, due to lower property assesments and down turn in the market area where I live.

I have decided not to pursue bankrupcy and I don't view paying down my mortgage as a good place to put my money, as per the down turn in my properties worth, Im not optomistic the market will rebound in my life time and thiers every chance I could lose more.

I have ruled out any chances to pay off my mortgage in my life time and in the in term I'm looking for a renter to off set my costs as I move in with my GF.

Lowest possible payment and lowest possible intrest rate on a variable term is what im considering, (I est 25 years on mortgage ) on the off chance the market will rebound, I know I'm paying more in the long term as intrest on my princepal is not being paid down quicker, with my new concept.

Any thoughts pro or negative?


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## MrBurns (Sep 12, 2010)

Just curious what part of Alberta are you in? It's the only province with real money although they are building homes by the boat load which I think can't help house prices.


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## Echo (Apr 1, 2011)

MrBurns said:


> Just curious what part of Alberta are you in? It's the only province with real money although they are building homes by the boat load which I think can't help house prices.


I'm pretty sure most of Airdrie could be under water if people bought with 5% down.


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## dogcom (May 23, 2009)

I think it would help those like Echo if we knew where you lived as far as the market possibly coming back. My brother in law had this same problem in Calgary in the 80's. He did end up selling lost a little but recovered and still living in Calgary and doing well. I wish I could say more and I hope the best for you in this tough situation.


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## hystat (Jun 18, 2010)

I don't understand how market value of the house affects one's ability to make the mortgage payments. 
Roomer sounds like a good idea.


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## jamesbe (May 8, 2010)

I'm confused. How does paying maximum interest help you any? Say if your house is worth $0 because the market tanks and you owe $200k on it but you put in $100k of interest payments, how is that better than if you now owe nothing but put in $200k principal and interest?

If you sell it now for $0 you still owe the bank $200k, if you sell it when you owe nothing at least you save the property taxes and stop the bleeding...

Also as hystat stated, why does it matter what it is worth? Realistically you owe what you owe, just pay it and live. Consider it as rent...


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## Cal (Jun 17, 2009)

From your other thread -


gt45 said:


> This never was abought a investment, it was abought finding a place to live...QUOTE]
> 
> Ever hear of renting.
> 
> ...


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## gt45 (Feb 6, 2012)

1. Place is up for rent, I move out, simple, but have not found a tennant who has means to pay.

2. Yup, it was a bad decison, how ever I needed a place to live, five years later, things changed.

3. Calgary SE (penbrook meadows)

Market vaule is based on city of calgary assements, last unit that sold was asking 145,000 grand, only unit that has sold in 1.5 years. when I bought assement was 195,000 on my property, units in the area were arround a average of 187,000.

4. IF I walk I owe, IF I stay, I still owe, so Im not looking at this as a worth while investment to sink more money into but more as a utility bill.

5. If I see the market comming back, I can put at least 20 grand into my mortgage, or to get out of my home with clossing cost's, pay out penalities, 

I don't see my self comming out a head this point in time with twenty grand down, because thiers potential for me to lose additional 30 grand!

( yes I will save on intrest costs )

6. Yes, this is my debit, and the bank is my land lord, so at best, I want to keep my comments up, with the lowest possible say to day costs, and rent out my unit to cover the mortgage.

7. RRSP and pension are were Im sinking all and aditional income into as I'm getting a way better saving and income vers mutual funds vers lossing more on my property.

8. Paying down my debit is on track, I should be at 0 (not including car) in abought 6 months.

9. age, I was 40 when I bought, got into the market late in life and will be getting out of the market even later in life.

10. 1200.00 is my monthly mortgage, I pay weekly, 277.00 and keeping up with the bills, IF i can get away from the concept of being upside down, it may make sense to sink every dime into the banks hands as thier could be a higher reward if the market comes back and I will have less oweing.

11. Please don't view this as me complaing but more of a proactive approach, for a workable solution.


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## gt45 (Feb 6, 2012)

jamesbe said:


> I'm confused. How does paying maximum interest help you any? Say if your house is worth $0 because the market tanks and you owe $200k on it but you put in $100k of interest payments, how is that better than if you now owe nothing but put in $200k principal and interest?
> 
> If you sell it now for $0 you still owe the bank $200k, if you sell it when you owe nothing at least you save the property taxes and stop the bleeding...
> 
> Also as hystat stated, why does it matter what it is worth? Realistically you owe what you owe, just pay it and live. Consider it as rent...


Thats the best advice that has come my way!!!


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## Sampson (Apr 3, 2009)

Why do you think it will not recover in your lifetime? I don't know specifically about Penbrooke Meadows, but rental and resale markets are pretty tight.

If I were you, I would cut my losses now. Unless your unit sees a 25% gain in the near future (unlikely) you will always be at a loss.

By simply paying your mortgage, over the 10-15 years it may take for your units value to recover to the original purchase price, you will easily have paid more than $30,000 in interest costs. You could find a tenant, but there is no way you would rent a one bedroom for more than $1200, so this strategy means you are also losing money.

It might hurt to sell and take a loss, but at this point, it is probably your best option, otherwise you could be in more trouble later on.


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## jamesbe (May 8, 2010)

City assements have nothing to do with sale prices. For example the assement on my previous home was $360, but we sold for $450.... Then bought for $500 woot the assement for $420


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## Cal (Jun 17, 2009)

You may find being a LL to have a great PITA factor, as you are already having difficulty renting it out. If may be worth your while to hire a RE agent or someone to find you a suitable tenant.

At some point you may feel it is best to cut your losses, and to take the financial hit, whatever it may be at that time, rather than sink money into repairs or time into tenants.

I guess it depends upon how much OT you do or do not get, as you may be able to use the extra money to put down on the mortgage, althought that in turn would give you less time to deal with the maintenance of the property.

It seems that you would rather bleed it out, than to cut your losses. Once the property is completely rented, what do you expect your shortfall to be monthly?

I am sure that you are not alone in being in this unfortunate situation. Many Americans have made it through this over the last few years. It can take time for things to turn around. This is a great example of what can happen, and why we should not have 0 down mortgages. You would not be in this situation if you had to put down 10% or something on each property.

Hopefully your monthly shortfall isn't too much and you are able to make it up, through some extra OT, or via some personal austerity measures.


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## Sampson (Apr 3, 2009)

jamesbe said:


> City assements have nothing to do with sale prices.


In Calgary they do. Property assessments are DEFINITELY based on market value. However, they are based on the previous years market value on July 1st, and not issued until Jan 1 of the following year. Depending on the community, there may or may not have been much change in the 6 months.


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## jamesbe (May 8, 2010)

I guess Alberta is different from Ontario, thanks for clarification.


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## MoneyGal (Apr 24, 2009)

Sampson said:


> In Calgary they do. Property assessments are DEFINITELY based on market value. However, they are based on the previous years market value on July 1st, and not issued until Jan 1 of the following year. Depending on the community, there may or may not have been much change in the 6 months.


What you've said is property tax assessments are based on market values. 

But do people typically sell their houses for an amount close to the MVA for tax purposes? 

In Toronto they don't.


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## Sampson (Apr 3, 2009)

Not always, certainly some valuations are out of whack, but listings and closing prices are mostly within a close range to the assessed value - I would hazard to guess plus/minus 5-10%.

Interesting how different this can be. I have never looked at Toronto's valuation method


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## financialnoob (Feb 26, 2011)

Sampson said:


> Interesting how different this can be. I have never looked at Toronto's valuation method


1. Consider the value of the house in any other market. Then double it. 
2. Keep raising it in $50K increments until you literally burst out laughing hysterically.
3. Profit.


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