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Thursday 03/27/2008

Today I would like to discuss a very interesting subject and would appreciate your comments and thoughts in return. If you had a chance to read yesterdays blog, this co-insides with what I discussed yesterday.

Every single day, as we all know, you see more and more borrowers who run into trouble and cannot make their monthly payment. I personally have run into a couple of cases where borrowers have told me they have taken a significant amount out of their 401K to make payments due to loss of job, injury, etc... Although this saves their credit, or even saves their house, is this really the smartest thing to do in that situation?

My personal thoughts on this are as follows. If you can't afford it, get out of it! Why take what you have saved for retirement, plus pay a penalty, to save something you can't afford any way.

I ask you all to please respond as I am very interested in eveyone else's thoughts! Thanks and make your day a great one!

Posted by Jacob Webster Indiana's Senior Mortgage Consultant on 03/27/2008 09:44 AM

Comments (8)

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8 Comments on Thursday 03/27/2008

MAR

2008

Good Post Jake,

Agree. While it may hurt for a little bit, the first loss is usually the best loss

Tony

Tony, Thanks for your response.

At that point in the game I agree. I am watching so many buyers walk from their homes because even with savings and other loan modification options they are going to have to walk at some point. It is just so terribly sad!

Kristen, It is very sad. Again I'd rather see a borrower walk away sooner with savings, 401K, etc... rater than later when they've drained it all! Thanks for your response!

Absolutely. Bite teh bullet and get out. If you foreclose will it ding your credit? Yes, but it is fizable over time. Don't dip into your 401k to finance your house. The only way I could imagine making sense of doing that is if they had a great amount and would be able to pay down the house and refi into something they could afford...but even then I would have trouble recommending that.

Great topic.

Casey, I appreciate your response. Borrowers in these situations desperatly need to get out and move on. You can always buy again when things get better and when your in a better position. Make it a great one!

I guess I disagree with Casey in that I would do everything in my power to stay out of foreclosure. You can always replenish your 401K but fixing your credit (and having the dreaded black mark of a foreclosure on there) can create even more future problems. Scores are becoming so important right now that even those at 719 can see some hits. Besides, going into foreclosure is dishonest. What lessons are you teaching your family, that commitments don't matter? Even if you were "duped" like so many claim, take some responsibility and do all you can to resolve the matter. At the very least and as a last resort, do a deed in lieu of foreclosure.

I know every situation is different but when you have a majority of American home owners in foreclosure not even speaking with their lenders, then who is the victim here?

Jacob if someone is in a house that they can't afford, then by all means they should sell it and find something else that they can afford. But in a lot of cases people have fallen on hard time and just need to buy a little time until they can get back on their feet again. In those cases I do feel that it is appropriate to try to hang on to what you have.

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