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Profile picture for single mom 3

my house is worth $255,000 even though I purchessed it 4 years ago for $485,000. Any suggestions?

Im thinking of walking away, but am not behind on my payments. Even if my bank did a workout and lowered my payment, it doesnt make sense to keep it at such a loss. Im really over homeownership at this point. Help

  • January 29 2009 - Murrieta
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Answers (7)

Best Answer

Profile picture for Rob Cochems
How are your payments compared to rent single?

Have you refinanced since you purchased or pulled out any equity?

Are you prepared for the implications to your credit?

Before walking you might want to consider a short sale.
  • January 29 2009
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Call the lender and inquire about a deed in lieu of foreclosure. You have to be current with your payments to qualify in most cases.
  • January 29 2009
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Single Mom, even though your property's value has dropped considerably, you can afford your monthly payment, right? You said you where current. 

You loved your home when you purchased it, didn't you? You can afford to stay, right? The value you receive from your home is the comfort of controlling your enviornment. If you purchased this home for a short term profit, too bad. If you purchased for a nicer way to enjoy life, nothing has changed, has it, except for what it's currently worth?

If you feel like "walking," even with a short sale, there's still a cost: Credit deterioration, taxes on the shortage, being at a landlord's mercy, relocation and lifestyle.

Give this more thought. ...Good luck with your decision!
  • January 29 2009
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Agreed.  Make sure to explore all options before walking away from your house.  Some lenders will entertain a "short-refinance" option as well, allowing you to stay in your home instead of selling it.  You might be able to see if your servicer will entertatin this by checking out their "loss mitigation" section on their website, or calling.
Good luck,
  • January 29 2009
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Profile picture for Mr. Realistic
Wow -- this one sounds like an easy "Walk Away."

Right now, there's $230,000 of negative equity in this home. The lender community -- the same guys who pay themselves big bonuses, throw parties, buy jets, etc. even in tough times -- would love it if you kept sweating away for another 30 years, sending them a full mortgage payment check for a house that just isn't worth that much. Your continued sacrifices would help them continue to enjoy the lifestyle to which they've grown accustomed.

But you don't have to do that. Walking away will save you from carrying a $230,000 boulder on your back. Yes, it will beat up your credit rating for a few years. But there are ways to rebuild your credit rating a lot faster than the banks want you to believe. And as long as you pay your credit cards on time, you won't feel much of a difference when you supposedly have "bad credit."

Is your mortgage with Washington Mutual, IndyMac or some other outfit that's already gone bust? All the more reason to walk away. They're deadbeats who are essentially out of business. Someone else inherited their assets for pennies on the dollar. They couldn't handle their own finances properly. Continuing to pay them is like sending Valentine's Day flowers every year to an ex-lover who's in prison and won't even get them.

Time to move on. Bravo to you for being ready to take the right step.
  • January 29 2009
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If you look at the history of real estate, it appreciates.  The market will one day rebound.   Look at real estate prices over the last 50 years.  This is just a small blip on the radar.

If you go with a short sale, you could still be responsible for the balance.

Walking away is not the answer.  Ask your lender about the FHA Secure loan....  Good luck.
  • January 29 2009
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Profile picture for Clearpoint
I'm with Rob on this one. 

I have personal issues with walking away but I can certainly understand the desire.  But if rent is far less than your mortgage for the same home then financially it makes sense but realize the full implications of doing so.

You borrowed money to purchase something you couldn't afford to pay for out of pocket at the time.  What if you did have the cash at the time, would you just walk away and take the loss then?  It just seems too easy to say walk away when it was not your money used in the purchase.  What if you loaned someone money to purchase something and they decided to stop paying you back because it wasn't worth as much anymore? 
  • January 29 2009
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