Since I am 22k upside down in my mortgage, why shoudln't I just walk away?
I am not going to do this, but I am curious, when the banks decide that your a credit risk they raise your rates, charge you fees, or do all kinds of stuff. Aren't they sorta getting what they deserve if when they make loans to purchase property, and that property declines in value, that they get it back and have to take the loss?
2008-03-18T15:59:58Z
I can afford it and am not walking away, I am just wondering. Also If I did just walk away, my net worth would be instantly 22k higher. Lets say I just bought a car, so I shouldn't need one for at least 7 years, have very little credit card debt.
I don't see how you can find fault with people who are walking away
Patrick2008-03-18T19:47:20Z
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You shouldn't walk away because you borrowed the money. The bank has no control of the market. they did not cause your house to lose value.
If you have ever bought a car, that has lost value. Does that give anyone the right to stop paying the car loan? If you do, the bank will take the car, sell it and come after you for any difference. The same thing happens with the house.
the bank didn't purchase the house, they only agreed to lend you the money you asked for to purchase the house. The only thing they did was get someone (appraiser) to make sure the house was worth what you were paying for it at that time.
Someone else said it correctly. What if you purchased the house and after 5 years it was worth $50,000 more than you paid for it. Should the bank get that extra money or should you? It should be you, it was you who agreed to purchase the house, it was you who took care of the property, etc.
Your net worth would not increase by 22k. You would still owe the debt to the mortgage company. If anything, you could end up worse off because foreclosures usually add about $40,000 in fees to the amount you owe.
Let's put the shoe on the other foot here, if your value increased would it be fair for the bank to ask you for some of that money?
Frankly I'm a bit sick of all the people that have your proposed mentality.
Let's try another view point too... When dead beats "walk away" from their homes you may think that the bank is "getting what they deserve" but what is happening in reality here is you screw up the economy for all of us since the Federal Government does not get "bail out" money from a money tree, they take it from all of us taxpayers. So in the future your kids Will live with you forever because they'll never be able to qualify for a loan and rent will be sky high because of all the other people that can't qualify.
22K is nothing, you'll recover that and more over the next five years... stay put and be proud you're a responsible adult.
What matter is whether you can afford the payments - not how much equity you have (or don't have). If you can make the payments, walking away would be foolish.
Banks don't raise mortgage loans rates "because they decide that you're a credit risk" - that's for credit cards. If its an ARM, it will adjust according to the loan terms.
Sorry your property is declining in value, that said, it is not the bank's fault. Think of it this way, maybe you would never have bought your house if you didn't get that mortgage, and the tax benefits that go along with that. Have you saved any money by not renting? Would you have spent $22,000 in rental that gave you no return?
Remember, your property may increase in value, and the bank will not ask you for any more $$$ when you sell.
When you signed your mortgage agreement you should have known the risks you were taking on. I hate it that so many people are losing their homes but that leaves people like me who end up having to pay for it. You walk away and that crushes your credit history. The gov't isn't really going to bail out all the mess, it comes down to the consumers who did read the fine print and knew what they were getting into. I'm fortunate that my job is pretty secure right now but I have contingencies if that changes - all on my own. I'm single, never married and I own my own home and have a great credit rating because I was careful and diligent in reviewing anything I got into. The rate changing you refer to is really on credit cards. That too is in your credit card agreement. The responsibility is on your shoulders to know and understand the risks and the rules.