Walking Away To Better Times

Much ado has been made about “walking away” from your mortgage by the financial services industry and the government. They say that it is wrong, that you signed a contract when you bought your home and you should honor it. They promise dire consequences ahead for you if you just walk away and hand your lender the keys to your home.

Homeowners walking away from their homes certainly is a problem for the banks: it causes them to have to face some serious losses and is a gigantic reality check. Banks don’t like reality checks much…they love playing with their funny money.

 

All that being said, there is a practical reason for walking away: giving yourself the freedom to move elsewhere in search of viable work when there is none to be had in your area. Certainly, the banks would encourage you to attempt a short sale. The only problem with short sales is that the bank gets to veto any offer it deems unacceptable and have been known to be extremely recalcitrant in working with potential buyers. Short sales can take forever and in the meantime, you’re still stuck in an unaffordable home and without any prospects for gainful employment.

Why should you go through that? It is not your fault you lost your job and that the economy in your area is not growing fast enough that you can find other work. It is not your fault that the banks and Wall Street took foolish risks and plunged the country into the worst financial crisis since the Great Depression. Why should you sacrifice any more of your time, limited resources, your health and sanity for them?

The answer is that you should not, and that is why walking away is your best option. In fact, you are fulfilling the contract you signed to the letter: you can’t pay, so the lender gets to take back the house. It doesn’t matter that they don’t want it, it matters even less that the bank already has thousands of properties it can’t unload. It signed the contract, too.

Yes, you will face consequences for walking away. Your credit score will take a dive, but I’m willing to bet that if you’ve been out of work long enough, particularly if you’re among the “99ers,” the term for the folks who’ve exhausted all of their unemployment benefits, that your credit is already lousy. Who cares. Your credit can be fixed over time. You also may not be able to get a mortgage for a while. So what? Do you really want to buy now? Home values have not stabilized and most economists predict a continued decline. That’s right, we haven’t bottomed out yet!

There are other areas of the country that are doing better than the sunbelt areas. Imagine the freedom of being able to move to one of these areas where there are jobs available? Imagine the freedom of not having to worry about making payments you can’t afford and bouncing around bills to keep the lights on and enough food in the fridge to feed your family? Is it worth the consequences? Absolutely! It is also a great way to stick it to the banks and make them feel the pain just a little bit!

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