With millions of Americans facing financial hardship and difficulty making their mortgage payments, there comes a time when a homeowner has to decide whether they should continue to make their mortgage payments and burn up their reserves or stop making the payments and conserve their cash savings. If you choose the latter expect a derogatory on your credit and the bank might take your house. So the burning question when faced with this dilemma is “Should I stay or should I go” or should I refi my home?
The facts are that many people took cash out, borrowed more than they can afford, took teaser rates, or applied using some form of a stated income loan which would often over inflate the borrowers actual income through the home refinance or home purchase process. The stumbling economy and a significant loss in home values, no wonder people are becoming trapped under mortgage payments they can’t pay and a home they can’t sell. Typically people are just vacating the property and the bank takes possession through foreclosure. Is this the right decision?
I don’t have the right or wrong answer here but I do know that up until the 90’s most people bought a house as a place to live and somewhere to stay and raise a family.That might be a Walton’s way of thought but sometimes the truth hurts.Increases in home values rose a bit faster than anticipated through out the 90′s to about 7% a year. Lending practices began to recover from the S/L crisis and a new way of thinking was born in the lending world. Do you have a pulse?What is your credit score? With that established paying for a house is obvious.With that in mind you might be able to say stated income and teaser loans were common, due to a housing prices from the mid 90′s.But the exposure is there as national values increased at an unprecedented rate, and people use that equity to buy expensive toys. With so many just using the equity in their homes as a personal piggy bank, we were destine to fail.
Fast forward about 10 years to 2008 we are all faced with the dilemma should I stay or should I go.If I vacate the property I should be able to buy another house in 2 years and by then prices should be even lower that what they are today. This is all true you can walk, you could buy your home for less, but do you really want to?Everyone was aware of the loans they were getting into, we don’t need a news story to tell us that a pizza boy can’t afford a Beverly Hills mansion. Again You knew what you were doing when you took the cash out home refinance, you knew what you were doing when you bought the home, don’t bring everybody else down even further as somewhere along the line we must just stop this madness.It is possible for all of us to avoid a depression by starting with our mortgages; we all need to take responsibility.