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Yes for the most part the advice you have been given is pretty weak and just a moral arguement. I know probably 10 people, including myself, who have walked on mortgages and I do not know any who regret it. You do need to know what to expect if you do and what consequences to expect. While something may make perfect financial sense in one state it may be a mistake in another. I agree with Rob in that you need to get good legal and financial advice. One think you will want to look at is your states law on recourse loans. From what I understand Illinois is a recourse (they can come after you for money owed later) state. I also understand it is one of the worst ones, from a consumers point of view, to walk away. Lots of people in recourse states are betting that the banks are going to just "write off" the money owed and in my opinion this is just not going to happen if they can legally go after you. If there is money to be made someone will figure out how to make it.
Tara,Makes very valid points, that you will suffer long term if you just simply walk away from the house. This will adversely affect your credit scores. I'm not sure what line of work you are in, but many employers pull credit reports on potential new hires. Having an adverse mark like this on your credit could cost you a future job down the road. Not only will this affect your ability to buy a new car, it will also affect your ability to obtain car insurance down the road.When you go to rent somewhere and they check your credit what will you tell them as to why you have this foreclosure on your credit for? My value of my house dropped? Something that you need to think long and hard about before making that decision to pull the trigger.
Tara made some very valid points! Walking away is a decision that you should weigh heavily because of the lingering effects it will have to your long-term credit profile.Walking away simply because the property is not worth what it once was, does not seem like a good reason. Real estate values will rebound, and if you can afford the home, I recommend holding on to your home.There are many things you can try before simply walking away like re-negotiating your principal with the lender. I will echo the comments from Tara in that, "walking away due to loss of value isn't a good reason for default", it's also not very ethical.Hope this helps - good luck with your situation
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