What would be more responsible, living paycheck to paycheck and paying my mortgage or walking away from my mortgage with the ability to rent a better house in the same neighborhood and pocket $1,000 each month? Serious question. I realize I overpaid for this in the housing bubble when I was 25, but I think it is more responsible to pay the mortgage.
Walk away. That is the plan b you signed on to when you signed the mortgage. You said that if you could not make the payments that you would give them the house back.
This is why mortgages used to require 20% down (and what we did when we purchased our farm). It was irresponsible for lenders to give 100% or even 125% loans because when someone owes less than the property is worth, they are not incentivized to walk away. And if they do, the bank does fine when they sell the place.
They were asking the borrowers to just give back the homes with these ridiculous LTV loans. They signed the same papers you did. Give the house back and let them deal with their irresponsible loan practice. They bought themself a house.
Note, this is not possible in all states.
SOMEONE pays the debt.
I have always felt that I should pay it if I incurred it.
In other words, if the house doubled in value I wouldn’t give half back?
Depends on how you look at iniquity on the part of banks and appraisers.
I was one of the people warning folks with deaf ears about why there was going to be real estate crash, and the long term nature of it.
Your financiers knew what I knew when you bought the house.
They absolutely knew that the market was going to correct itself eventually.