First-time home buyers who have some cash on hand aside, this is not a good time to be trying to borrow for real estate if you're a "young" borrower. By young, I mean you've been in the homeowner game for less than ten years.
Diana and I both fit in this category for our respective houses. In trying to unload hers, there has to be a loss. There's no getting around it, and we know it. The question is, how much of a hit can we take?
So far the shopping for an equity line against my house isn't going well. I suppose I should be happy I even have equity, but that's of little good when the market is in such a crapper that you no longer have enough for a solid LTV ratio. Here's how it played out. Stephanie and I were able to buy the house on 10% down for $180k with a second mortgage for $9k to get us to 15% down on the primary loan. Lenders were more than happy to do that in 2001. When we got divorced in 2006, the house was appraised around $195 I think, and I had to give half of the equity to her (I think around $18k). I'm not angry or bitter about it, that's just what it was. So I refinanced for $165k with a no-cost loan and had theoretical equity around $30k, still at 15%, and banks were comfortable with that. No PMI or anything. A year and a half ago, looking at sales around the neighborhood, it looked like I could easily get $205k if I wanted to sell, so that put me in the $40k range, and that made me happy.
Of course, you know about all the bullshit since, and a realistic view now is back down to $195k. The trouble is, the lending standards are higher. My current bank wouldn't even refinance at this point because now they want an LTV of 80%. One minor win for the day: they were able to do a rate adjustment on my current loan, more than a half-point down, for a $100 fee. It lowers my payment by $51 a month, a $600+ win per year.
So shopping around and looking at terms, in a best case scenario, I might be able to find an equity line of $10k (some lenders will go up to almost 90% LTV for equity lines), and probably not at a good rate. That gets us somewhere, if not anywhere great.
Then there's the issue where I think the new Realtor priced us too low. I think that because an offer came way too fast (after a year of nothing at a higher price) and researching sales around as of late makes for a higher average. It's not that I don't trust his research, but I think our priorities are slightly at odds. He wants to move a house quickly so he can get paid, we want to avoid being totally hosed. We're trying to come up with a number at this point that is the absolute lowest net-to-seller line, and it's contingent largely on what I can get out of my house, which isn't much.
Needless to say, this is taking a huge emotional toll on Diana. It causes me stress, but I'm trying to avoid emotional reaction since there isn't anything I can do about any of this. All I can really do is hope that one of these job leads pans out and I can quickly build a reserve of cash. Or some Brits randomly offer me $100k for a domain name again, but I'm betting that's not gonna happen. ;)
At the end of the day, all we can really do is look at this as a suboptimal scenario, but it's not one that will cause financial ruin or tragedy. Things won't suck forever.