Tuesday, May 05, 2009

I lost the nest egg

Say it! Say it! Say "I lost the nest-egg." Go on, say it!
-Albert Brooks as David Howard, Lost in America
I wouldn't exactly say the nest-egg is gone, and we definitely didn't lose it. Here's what happened.

About 4 months ago, when interest rates dropped dramatically, we tried to refinance our mortgage. Our credit is good (710+) and we had about $75,000 in equity in our home (we thought). The appraisal came back about $30,000 less than when we last refinanced about two years ago, and that put us just outside the 20% equity needed to
to refinance at the rate we wanted. We decided it wasn't worth pursuing at that point.

Fast forward to now. The rates dropped again, and we qualified for a new refinance program (what my brother the mortgage guy refers to as "Obama loans") that would get us a 4.875 % for a 30 year fixed loan. We had to get a new appraisal.

According to the new appraisal, our house is worth $45,000 less than it was 4 short months ago. We now have, according to this appraisal, zero equity in our home after living here for 19 years.

Never in the last 20 years have I been so grateful to have a secure government job with a solvent pension fund. We still qualify for the refinance, and that will save us about $200 a month. Other than the anxiety-inducing knowledge that what we had viewed as a nest-egg (about $75,000 in equity) has vanished, it won't create any real impact on our day to day lives for the moment. It does mean, though, that there will be no early retirement. Moving back south any time in the next 5 years is a dead idea now. There will be no more trips to Kentucky to look at farm properties. The compound in all its sprawling, fortified, rural glory will remain a pipe dream for probably another decade. I'm sure that the value of our house will come back, and things will work out.

We explained the situation to our daughters: if MizBubs and I did not have reliable jobs, we would now essentially be one paycheck away from being dead broke. If we needed to relocate, we would walk away from the sale of our home with whatever we had in our checking account and would no longer be able to own a home. Our girls have learned a valuable lesson about the vagaries of our economic system, and I don't think they'll be taking much for granted now.

I am going to bed now to count my blessings.

19 comments:

Mnmom said...

We are the horrific flip side of that coin. Private sector job in construction that went belly-up. Not only no equity after 12 years, but no home either! We played by the rules and got screwed - I don't know WHAT to teach my children now.

Gifted Typist said...

I know many people who would wallow in the down side of this. You are an inspiration, a person who finds the good.

BTW, my other half and I have been fighting these past few months to save the business we started 20 years ago and live on.
It is everything we have an if we lose it we lose everything... I have been doing the same putting huge energy into counting my blessings

Bubs said...

MnMom, I have followed your story with great sadness and disbelief over these past few months. The father of one of our daughter's friends is a general contractor and he's been mostly out of work for at least 6 months now, and they're starting to reach that desperate point. There is no safety net for them, either.

GT, that has to be an unbelievably scary and stressful burden. My partner was talking yesterday about how he went into government work partly as a result of seeing his dad lose jobs as he grew up. His dad opened his own business as a reaction to that, so he wouldn't be laid off again.

It pains me to see public employee unions and pensions coming under attack and receiving blame for deficit problems in many areas. We are the last group of workers to have health and retirement benefits that were viewed as typical for all middle class workers 30 years ago.

Megan said...

Prices will come back. They always do. But I think it's gonna take a hell of a lot longer this time.

Randal Graves said...

It's a good thing everyone is hard at work fixing the structural problems of the economy.

Oops.

Dino aka Katy said...

Its weird values of home plummet but my damn tax assessment keeps going up its gone up over $100,000 since I bought the home in 2003!!!!!

I freak out everytime my company announced labor cut backs - there have been a lot lately. My boss thinks its funny I worry as she claims the only way she lets me go is if she goes with me - but still in this time and age there is no such thing as job security.

dguzman said...

Wow. Good luck, everyone.

Bawwb the Revelator said...

Used to be "Mean Streets" were a side of town you avoided if you didn't have... well, your training and skills, Bubs. Now my "upscale" LA street is Foreclosure Alley. I believe you wrote of Obama:
"Beware of any product of Illinois politics." Bingeaux! In a fair world [where's that?] this cat's slogan woulda been "Banks SI! Sorry 'bout the rest of y'all."

I feel for y'all but have no damn prospect of ever being the Prez's Analyst.

kirby said...

"Zero equity in our home after living here 19 years."

On a much smaller scale, the money we put into Slim's college fund last year was just about exactly the same amount it lost as a result of the stock market dive.

We're all in this together, Bubs.

Bawb the Revelator said...

Bubs; forgot to post this video. Less than 3000 views as of a few minutes ago. 12 [Twelve!] Dems voted to kill it.

When a President who ran on HOPE doesn't twist arms for a bill by the Senator from his own state... well stuff like this gave us the French Revolution. Behold:

http://beltwayblips.dailyradar.com/video/mortgage_bankers_celebrate_victory_1/

Suze said...

Scarey times my friend.

Barbara Bruederlin said...

You are taking this with the right attitude. It's very hard. I know we lost about a third of our investments and we already started building a cottage which we can't back out of, so it's all scary.

But it will come back, and we just all need to have each others' back. Hang in there.

Johnny Yen said...

They didn't even comp your breakfast.

bubbles said...

Scary times. Really. You are right though. I just tell myself that I have a mission: raise my kids and do the best I can; and everything will work out as is should.

I bought this place at top-freaking-dollar in 2005. I've put in at least 100k... I don't even think of getting an appraisal. Too depressing.

Oh, my credit rating is tanking. Know why? I had a boatload of open credit lines. They had zero balances. The m-fing banks are closing them down. When they close them my debt to total credit ratio tanks... along with my rating. Do I pay the bills? Yes. Am I in default? No. Go figure.

Lisa said...

We cried uncle several months ago. I hate it that what you were expecting to be your major investment (and real estate was supposed to be safe!) has lost so much value.

Good for you for using at a teachable moment for your daughters. I think parents have a tendency to shield their kids from the money issue and that's a terrible mistake.

Mathman6293 said...

I went to the old homestead today to pick the last straggler items - two trash cans. The process has begun for us - the court lifted the stay so the bank can foreclose on the house.

It is funny, the house is essentially the same as it was last year before we fell so far behind except that the grass is over- gown. That grass says the same thing as your appraisal:"Decreased value my friends."

Bubs said...

Mathmanm, "decreased value" indeed. A guy I work with just had a home two doors down from him get sold after foreclosure for about $100,000 less than what it cost two years ago.

Bubs said...

Lisa, like I said, at least my job is secure and my pension sound. If I didn't have the pension right now I don't know what I'd be thinking.

Bubbles, yow. It's just terrible all the way around isn't it?

Johnny Yen, hah! No, they didn't!

Barbara, so it's a similar mess in Canada?? Yeesh.

Suze, Kirby, DGuzman, yes. Scary times, and we are all in this together--and we all need that good luck.

Bawb, we need to put you in charge man. Seriously.

Dino, no kidding. Government entities are already losing sales tax revenues like crazy, they'll do what they can to hold on to real estate taxes no matter what.

Randal...don't worry. The Obama administration has handpicked the best and brightest from the banking and finance industry to fix...the banking and finance industry. I'm sure they're looking out for what's best for the little guy.

Megan...hopefully I'll get it back in the next 5-10 years. I can deal with that. Hell, I have to deal with it.

Thanks everyone for your kind comments. MizBubs found it very comforting.

Distributorcap said...

bubs.. wow
(sorry late for this, the few of us who still have decent jobs are finding ourselves working 3x as hard to ensure we keep these jobs)

i just refinanced last july. then the rates dropped so i am refinancing again.

the appraisal this a march was $120,000 less than it was last july- 8 months later. and i put $10,000 into the apt in improvements. i barely qualified for the refinance - but i did. i did get 4 7/8% 30 year fixed. and chase was so nice as to waive the application fee since they already held my mortgage.

a friggin mess, but like you i often thank the lucky stars and i have a good job and a decent pension.

i really feel for people out there who are struggling every day - and the damn bankers just dont give a shit