What is up with home owners today? What is up with people just walking away from their homes because "They owe more than the house is worth". Purchasing a house has always been a gamble. 25 years ago I tried to get a home equity loan on my house but couldn't because I owed more than the 70% value of the house. I didn't say "Well than take my house I don't want it". That was not a thought that I would have ever crossed my mind.
Now my real question is are there really that many people who are choosing to walk away from the homes because of the current value of their home or is this just another thing that today's media it touting as truths. I can honestly say I have not personally know anyone who have chosen to do this. In my line of work I talk to people about their homes everyday and only a couple have said they were "allowing" their homes to be foreclosed on.
My thought is was self respecting person would just willing give their house back to a bank because they owe more than it is worth. I get it if they can't pay the mortgage but then that goes back to my blog yesterday, did they actually purchase a home they could afford or did they buy "over" their heads. And even if you couldn't pay your mortgage couldn't you file bankruptcy. Of course I shouldn't judge any of the people who chose to do this because I don't truly know their circumstances but in the reports I have seen through the media many of these people can actually make their mortgage payments but chose not to because their house isn't worth what they paid for it.
Anyone who has been around for a while (I am 47) knows that the economy is like a roller coast. It goes up and down very quickly. The peaks are very high and the valleys are very low. Real estate is the same why. Sometimes it's a sellers market and sometimes is a buyers market. If you buy high chances are at some point you will owe more than your house is worth.
My opinion is if you are not willing to ride out the storm, don't ever buy a house.
Stacey - While owning a home is a long-term investment in historically you gain equity while paying down the principle, the notion of just walking away because your underwater isn't one I'm in love with either.
ReplyDeleteFrankly, it's a home and not an ATM Machine. The folks who used it as the latter with artificially boosted home values are probably more likely to just walk away because the equity is no longer there. Your last sentence says it all.
Jason Sardi