Should I walk away from my mortgage?

I'd follow supafan's advice as well.

Also, don't be freaked out by the market. Many, many of the houses that "won't sell" are severely overpriced and haven't been taken care of. If you price your home reasonably and have taken care of it, you can sell it by owner and do fine, even in this market. I see it all the time. But you have to do the work - curb appeal and presentation make a HUGE difference in a buyer's market. Location is a big deal as well - schools, shopping, etc. play big in the current market.

 

This conversation points at the real issues at the core of the current housing situation in some places. Americans' expectations of what we can afford have gotten seriously out of whack. I'm guilty of this, myself. I just got lucky and was able to sell at a better time in housing market.

But putting nothing down on a house I couldn't afford to rent out with an adjustable rate mortgage currently at a "teaser rate" - which is what I and many people did - IS JUST DUMB. It was very risky and, in retrospect, I should've put 20% down and bought a smaller house (that I EASILY could've been comfortable in) and let equity build so that I can trade up to a nicer house over time.

I got lucky. Many didn't. I'm hoping most of us are picking up on these lessons. Otherwise, we'll all be right back here in 30 years, when the banks start loaning freely again.

 

The 15 year fixed is the smartest way to go. Its about 250-300 a month difference.

I wouldn't wait too much longer on prices to bottom. In the older Baton Rouge neighborhoods like Southdowns and Capital Heights prices are already starting to climb. In the newer subdivisions you have some time, but they mostly suck.

 

i disagree. if i had put 20% down id be in the same position---except with $50K less in the bank. if a house is down 20%, its down 20%.

id love to let equity build, but im always on the lookout for a better job.

 

True. The idea of putting 20% down is fine if you plan to stay there a good while and maybe pay the house off.

The real key is to "always buy good values". That's one of the mantra's of the newsletter I subscribe to. Sometimes stocks are good values, sometimes its bonds, sometimes international, sometimes real estate, sometimes gold, sometimes fine art, sometimes the Euro.

The key is to find the good value, buy it, let the marketplace recognize the value and price it in, and when it is priced in or at a premium, sell it and go find another well valued investment item.

If you buy a good value, there is little risk of it going down, or of it going down very far.

 

Pay your debts. I wouldn't consider walking away from any agreement I'd entered into to pay for something...NEVER...assuming I got what I told I was buying.

 

walking away is better than foreclosure. the bank saves a ton on time and money and has a better chance of breaking even.

its not like you bought a twinkie on credit, ate it and didnt decided not to pay. there is still a physical house.

so what would you do if you were transferred by your employer?

 

If you walk away the bank will foreclose. They will take the deed of your house sell it for 40 cents on the dollar and chase you for the difference. Do not walk away. It is not an option if you plan on taking out a prime rate mortgage in the next ten years.

If you do a deed in lieu of foreclosure it will mess you over just as bad, and if you don't have the phrase deed in lieu of foreclosure without recourse, or something similar, they will chase you for the gap between the shortage between what the sale brings and what you owe. This is a piss poor option. Do not do it.

Sell the house yourself with a realtor and retain control of that shortage.

Your lender is not going to let you walk away and anyone who tells you differently is selling something.

I would first try to have my employer buy my house. If the company didnt do that I would put my house on the market and start negotiating a short sale with my lender. I would rent extremely cheaply until I dumped the old house and had at least a 20% down payment on a house where the monthly payment was no more than 1/3 of my take home pay on a 15 year fixed rate mortgage.

 

I'd get relocation help from them but yours is not company initiated is it? I thought it was a choice. Regardless, I know sometimes life has unexpected turns and I probably would have rented until I was sure I wanted to be there.

Still, I'd pay two house notes or rent a second, till I could sell it (Which is, admittedly, a bad situation) or I would stay put cause I couldn't afford to move.

I just bought a new truck and the guy told me, as we were closing the deal, that my credit rating was 830. He said the highest you can have is 850 and nobody had that. I thought it was funny, during the previous two trips there, that they'd made a couple of comments like, "We're not worried with you" like for the $200.00 deposit they normally require and letting me leave with the truck before actually hearing back from my loan officer- who, incidently, gives me "Open loans". I pay them when I want and as much as I want.

My credit is important cause it's a sign of integrity- which is even more important to me. Not that people can't have integrity without good credit, which is why I said "A sign." I've NEVER carried a balance on a credit card.

I got a call today and some guy said I had an expired Visa with a balance and I told him no way cause of that (Never carrying a balance) and he immediately said, "Wrong guy." He did ask if my last four social security numbers were ---- and I said no, they weren't either. :wink:

We're not wealthy but I never put more on than I can afford to pay when the bill comes in. I use credit cards as a convenience, not as a loan. That's another subject though, also a pet peeve of mine cause credit card abuse in this country is off the charts.