Hi, I bought my condo in 2006 at the high-point ($400K) and put 20% down on a 35-year loan (first 5 years are interest only, after that, I have a 30-year fixed, but the interest rate does not change at 6.25%. But then, I will pay another $400+ per month to start paying down on the principle). In the last year and a half, my condo went down in value by the money that I put down. Now my home-owner's association is asking for a "special assessment" of $16K to do some condo repairs and upgrades. I cannot get a home equity loan from any lender. I'm starting to feel trapped, not only with losing all that I put down, but having to pay the assessment, plus another $400. per month added to my mortgage in (3) years. Do you have any guidance for me?
Nancy
Nancy - Assuming you are living in the condo and not planning to sell it, the current market value is of little importance. You have a place to live, and you didn't say anything about your income changing, so while it may be discouraging to see the values take a dip, it shouldn't affect your monthly budget.
By my calculations, your payment will go up about $304 per month when you start paying down the principal. That's still three years away. Surely by then you will have advanced in your career and be making more money.
The $16k assessment is the biggest problem. If condo values have gone down, you can't be the only person who can't just get a home equity loan and pay it. I'm surprised the condo board voted for this. Have you asked if you can make payments on the $16K?
The good news is that your condo value is almost certain to go up by more than the value of the assessment, plus it should go up in value over time. You just have to hang in there. Real estate is a winning investment if you stay in there - just look at what prices are now vs. ten or twenty years ago! You can hardly help coming out well in real estate if you buy good properties, in good areas, and hang on through the dips and valleys.
So don't panic! Find out if you can make payments on the assessment, stop looking at the current market prices too often, and enjoy your condo.