Tuesday, October 12, 2010

Time: Does Paying Your Mortgage Make You a Good Person, or a Stupid Person?

I think here is So Cal where some homeowners might be $300K upside down or more they are asking these questions.

Regardless, many homeowners continue to pay their mortgages because 1) they love their homes and don't want to ever lose them; 2) they believe the real estate market will rebound and their homes won't be underwater for long; or 3) they think that paying the mortgage is the right thing to do
And the other side
But while it's fairly easy to rationalize walking away, there are consequences—obviously for the individual's credit score and for the lender eating the loss, but also for the business atmosphere at large. If people make it a habit of walking away from their obligations, whatever trust there was among buyers, borrowers, and sellers erodes further and further.
 However, I think in the last few years we have seen the true cost of borrowing.  Plus, we might have judicial cram-downs coming.

Read it all

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