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- IRS Supplies Guidance on Home loan Modifications
- Indiana State Mortgage Help for Those in Danger of Foreclosure
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- Wisconsin Mortgage Assistance Programs
- How to Write the Mortgage Hardship Letter
- CHFA EMAP Program for Homeowners
Walking Away From Your Mortgage 2010
That the economy is hard right now is no secret. People are unemployed. Those that are fortunate enough to still have their jobs are finding that they are working longer hours, often for lower pay. They are struggling to pay their bills, including the mortgage. Making this already bleak picture even worse, is the fact that for many people, they now owe more on their house than it is worth.
It has always been commonly accepted that your home was an asset. People bought their houses for the stability, the investment and the financial security that they offered. By purchasing a home, people had something to fall back on in hard times. They made sure the mortgage was always paid, before all other bills. People would forego paying other credit card bills, and even buying groceries, because the mortgage was sacrosanct. Nothing stopped them from making that payment. In turn, their homes could be refinanced, equity tapped into.
This current economic situation finds homeowners in very bad positions. Not only are they finding that there is no equity in their homes to utilize, they are finding that the homes are worth much less than what is owed. This situation prevents them from being able to refinance the homes to achieve a lower monthly payment. Simply put, they find themselves in the position of struggling to keep a house that is not worth the payments they are making.
This creates a paradigm shift in the mentality regarding house payments. Once thought to be the comfort and safety that they couldn’t live without, they are starting to believe that keeping the house will be impossible. Therefore, people who once sacrificed all other debts in favor of the mortgage are now doing the exact opposite. They are sacrificing the mortgage in favor of keeping up with car payments and credit card payments. What once was an embarrassment has almost become a badge of honor. People who once would have never admitted to defaulting on their mortgages now are almost proud to say that they were forced to walk away from a mortgage on a house that was valued at less than the note. They are looking at rentals around them and deciding that they can very happily live in a smaller home where they will pay less in rent than they are currently paying on their mortgage.
Interestingly, this phenomenon is even happening with people who can afford to continue meeting the mortgage. Even people who can pay the mortgage are making the same decisions. There is a belief that the market will never recover, that they will never recoup their monthly investments in the property. These people begin to view the monthly mortgage not as money well-spent to protect a valuable asset, but as money thrown away. They are also making the painful decision to walk away from their mortgage in 2010. Like people who are unemployed and can not make the mortgage, they are realizing that they can live quite happily in a rental that requires a lower monthly commitment.
However, there is hope for some families. The Federal Government has a strong desire to see homeowners stay in their houses, and out of foreclosure. They are offering financial incentives to mortgage holders to work with homeowners. They are encouraging mortgage companies to meet with homeowners who are in default to rework the mortgages and offer lower interest rates. These lower interest rates can mean the difference between being able to make the mortgage and keep the house, or being forced into default.
Anyone currently facing foreclosure who wants to keep their home should contact their bank for more information on mortgage assistance. With the incentives being offered, there may be hope that you won’t have to walk away from your mortgage in 2010.
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