Phoenix Real Estate: Is it Okay to Foreclose on Your Home? Part II

Phoenix Real Estate: Is it Okay to Foreclose on Your Home? Part II

Yesterday, we began to talk about the great Arizona real estate debate of the moment, Phoenix Real Estate: Is it Okay to Foreclose on Your Home? Part I.  In the first post, we argued for the side of the argument that says "Yes! Foreclose away!". (With some good research and first consulting a tax advisor, of course.) Today , we will investigate the side of the argument that says, "Never. As homeowners, we have a financial obligation to fulfill."

Side 2: Make Good with your Financial Obligations

Just as we saw with side 1 of the of great foreclosure debate, supporters for honoring your mortgage obligations have a hearty argument on their behalf as well. In fact, many Realtors believe that it is the people who did not honor their mortgages that got us into the foreclosure crisis we are currently experiencing.  This side of the argument claims that you bought your home when the market was, assumedly, in your favor, with the intention of paying your mortgage until your loan was "free and clear".  Why would that change for you personally, despite a decline in value. For instance, if you bought with the intention of living in your home until retirement (never selling), why would you sell now because of what is going on in the outside world?

Is there financial incentive, however, to hold on, despite these tough economic times?  Many experts say yes. In fact, for those that have held on to their homes despite the diminishing economy, a new program is coming out the first quarter of this year to help.  For homeowners who put 20% down and documented their income as they should have, they will now be able to refinance their homes, despite being 50% or more upside down.  No appraisal will be required, and they will be able to take advantage of low rates (close to 4%) on 30-year fixed-rate mortgages.

In conclusion, no one can tell you what is best given your specific and personal situation. Walking away, or staying in your home, can have equally heavy consequences, depending on your financial situation, and your goals of home ownership. Before making any radical decisions, it is always best to consult a tax advisor or real estate attorney who can help you analyze the specifics of your individual situation.

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