Every homeowner struggling with their payments is making the decision of maintaining increased payments or face foreclosure. That might be the worst choice, because you will drop your credit score and the bank will foreclose. So the burning question when faced with this dilemma is “Should I stay or should I go" or should I refi my home?
The facts are that many people took cash out, borrowed more than they can afford, took teaser rates, or applied using some form of a stated income loan which would often over inflate the borrowers actual income through the home refinance or home purchase process. Every lender across the country has made it more difficult to get a refinance due to lower home values and mortgages with a higher balance than what its worth. With so many people just walking away from their homes, banks are picking up homes left and right. Is this the right decision?
I don’t have the right or wrong answer here but I do know that up until the 90’s most people bought a house as a place to live and somewhere to stay and raise a family.It is understandable that is a very conservative way of thinking but we all know it's the truth.We saw the 1990's bring an unexpected increase in the national home value average to 7% annually. Lending practices began to recover from the S/L crisis and a new way of thinking was born in the lending world. Can you lift your finger?Credit rating? Well then you obviously are able to get a house. At that point in time(the mid 90’s) housing prices were lower so from a relativity stand incomes could in theory support the median home price; so I guess stated income and teaser loans then MIGHT have been okay.Now we see the exposure with home values increasing too fast and people tapping equity to purchase luxury items. These items were usually paid for with the home's equity, creating a false sense of financial security.
Fast forward about 10 years to 2008 we are all faced with the dilemma should I stay or should I go.If I vacate the property I should be able to buy another house in 2 years and by then prices should be even lower that what they are today. This is all true you can walk, you could buy your home for less, but do you really want to? You knew what you were doing when you signed on the dotted line, what has changed since then; other then heightened media coverage on the housing market failures which is feeding consumers brains and giving them the food for thought on how to walk away. Again You knew what you were doing when you took the cash out home refinance, you knew what you were doing when you bought the home, don’t bring everybody else down even further as somewhere along the line we must just stop this madness.With the threat of a depression looming it is time we all take control of our homes and neighborhoods to ensure we avoid foreclosure.
