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is it worth to keep paying for my property even if its not worth what i pay for it?

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February 08 2011 - Joliet
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Agree with the advice on getting counsel. 

If you can afford to make the payments and want to continue living there I would say stay and keep paying.
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February 11 2011
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You need to seek legal advice and make the best financial decision you can. If you are underwater a little (25K or less) it is probably not worth walking away. If you are severely underwater (100K or more), it might be worth walking if you can protect your other assets.

Talk to an attorney now. First consultations are not expensive. That will allow you to get up to date on the law in your state and get all your options on the table so you can make the best decision possible.
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February 11 2011
shasta-steve hit on the point that here in Illinois we are a recourse state which means the bank can sue you for the deficiency whether the home is a "short sale" or "foreclosure".

Many of the "short sale" deals I have been working on,  banks are not offering a full release of the loan....meaning the owners are either having to bring money to the closing or the banks are having them sign an unsecured note paying back the deficiency.

I would recommend contacting an attorney here in Illinois so that you know what legal ramifications there are when walking away from your home.




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February 11 2011
Profile picture for shasta_steve

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.  

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February 08 2011
It depends how much underwater you are, and also if your loan is a non-deficiency loan.

For example, if you are underwater by $500K and the bank has no recourse to come after you for the deficiency, then financially yes it probably makes sense to walk away. After all, your credit would very likely recover alot quicker than your home value ever will.

Do not accept the very weak minded advice offered by some on this thread. Your credit score isn't worth anything near several hundred $K, don't accept moralizing from people on here either. [unless you have a valid reason... blah blah blah. the Mortgage bankers association walked away from their own headquarters while advising home owners not to. How is that for hypocritical? ] Seek competent legal and financial advice.  
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February 08 2011

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.

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February 08 2011

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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February 08 2011
Is there a good reason to walk away?  Have you lost your job and need to relocate? Are you in dire straits because of an illness?  If you walk away where will you live?  You will either pay rent or a mortgage.  

If you are still employed and don't need to relocate, my advice is to try  stick it out.  Walking away due to loss of value isn't a good reason for default. 

Your credit will be effected greatly.  Is it worth paying a higher interest rate on every new purchase you make for the next few years?  You may not be extended any new credit.  There are long term consequences to deal with. 

 
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February 08 2011
 
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