We occasionally hear about "strategically walking away from your mortgage"; basically a scenario where you can pay, but because you owe more on your mortgage than the house is worth, you decide to throw in the towel.
I have always been against this. This is America; risk big, win big. Risk big, lose big. The chips fall both ways. I owe more on my mortgage than my house is worth, but have kept making my payments; that was the deal I made, and as I have no extenuating circumstances (yet), I continued to do so. But now I wonder if I am doing the right thing, or if I am just smoking crack.
Scenario #1 - I am upside down on my mortgage, but I keep making my payment, because I can, and it is the right thing to do.
Scenario #2 - I am upside down on my mortgage, and I have been making my payments, but as I look down my street, I see homes that I know, from public records, have been foreclosed upon. Months ago. Yet the owner is still living there. Then I read in the paper that banks freely admit that it can be on average 18 months between the time you make your last payment and the time when the bank actually forecloses.
So as I sit here and get out my virtual checkbook to send in yet another payment on my depreciating asset, I can't help but wonder who the sucker is, and as I can't confirm that it is the guy down the street who is is banking his cash while he lives rent free, I have to wonder if it is me.
Kevin McGrath
RE/MAX BRAVO - Broker/Owner
Spotsylvania, VA 22553
Licensed in the Commonwealth of Virginia
www.fredva.com
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