If the recovery in home prices is substantial enough, this could keep my husband and I out of extreme poverty in our senior years, by
allowing us to stay in our home and therefore keep our monthly housing expenses fixed through retirement. (If we rented, and rent increases over the years were a mere 5% per year increase, then beginning with an $800 a month charge, in ten years, we would have to pay $1241 a month, and in 20 years, $2021 a month. I am 58, so living another 15-20 years is feasible).
If we were not underwater, we could refi and save at least $200-$300 a month. Unfortunately we bought at the peak of the market; a bad timing coincidence of two older people having to start their lives over just as the market peaked. Our home value had plummeted by 39%; current estimates have improved to a slump of 31%. We don't qualify for HARP help because our loan is not Freddie Mac or Fannie Mae, just straight up FHA. We don't qualify for straight FHA help, since at this moment in time, our mortgage payments do not exceed 31% of gross income. Our credit rating and debt-to-income ratios are good.
So the issue is the underwater thing. The closer our home value comes to our mortgage balance, the more likely we would be able to refi....if interest rates don't go back up to where they were back then (6.25%).
Two years ago, I was certified as a teacher after graduating summa cum laude with excellent reviews of my student teaching...just in time for teaching jobs to be cut 55% between 2009-2012. For every opening now, there are hundreds of applicants. I can no longer perform my former career job duties, and so have been unemployed, just doing day to day substituting where possible, earning less than I could earn working in a restaurant (but my body won't let me take the latter option). As a result, our income is down, and our expenses are up with college loan debt.
My husband (62) was diagnosed earlier this year with chronic kidney disease, stage 4. This will force him into taking retirement, most likely by the end of this school year. This is several years before we had planned, costing us about $400-$500 a month in pension income we otherwise would have had. He won't be 65 yet, so drawing Social Security early will cost us another $500 a month in planned income from that source. Unless he goes on dialysis, which we would hope to postpone as long as possible, he won't qualify for Medicare, so we will have to pay $1500 a month to keep his health insurance plan in force. So our income will shortly suffer another big pinch, and our expenses go way up, a net negative difference of $2500 per month over what we projected. On top of that, he increasingly needs my assistance to get through simple things, as the disease and its treatment are impacting his abilities to think clearly and to remember things (short and long-term memory). He started with a position of ADD, and this health problem just makes remembering and focusing even worse. He doesn't even remember to eat some days, and with diabetes (under control), that is not good. This makes me realize that before too long, me working even part-time will become a more and more restricted option.
So, our savings would be 'presevered' and our income best protected if we can stay in our house; we need every penny. But that's just our situation.
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