Quote:
Originally Posted by ranchlandsselling
It's interesting, consider what you'd do if housing dropped 30%. Let's say your house was worth $550,000 at the peak, drops to $385,000.
Personally if I had my same job and felt relatively safe in my employment status and could handle my mortgage at existing/future rates. I'd take my mortgage (which most are generally portable) and upgrade houses. Go buy a new house at the same LTV that my prior purchase was at. Your old house value at $550,000 would be able to afford a house that was previously at $785,000. Obviously coming up with a downpayment might be the biggest issue. But if you're taking your debt with you, you don't have to come up with any cash to "pay out an underwater mortgage".
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You have to compare equity in the old vs new, as the "sale" prices aren't as relevant. But you're on the right track.
I've been waiting for a correction in order to upgrade, for YEARS. The hard part now that it is here....is pulling the trigger while house prices are still going down. After all, that 785 house might not be worth 785 in a year. It might be worth 750. Convincing yourself to buy when that is a real possibility is harder to do than you think.