Thinking of walking away from your home because your property values have dropped to below what your mortgage is? You might consider that if you do walk away, what are you going to do? You’ll have to rent, your credit score will be ruined for seven years and you will have lost the home that you call your own. A home in which you could gain a profit from in the future. A case in point is the story of David Bach.
“In an interview with the AOL.com personal finance Web site, Walletpop.com, Bach said about 50 percent of homes in foreclosure are there because their owners walked away from underwater real estate. He calls that “stupid, short-term thinking” and recalls a condo he bought in New York City in 2003. He put down $600,000, then property values dropped and he lost all his equity. “I was bummed,” he said.
But the loss wasn’t permanent. Four years later he sold the condo for $3.65 million – and made a $1.5 million profit, after commissions and taxes.
Some people might have thought it was “logical” to walk away, he said. “But it would have cost me $1.5 million.”
We are not going to be in a recession forever, and real estate values will increase again. You always have “experts” who predict the world is going to end and bad times will last for an eternity. Don’t listen to them; look at the economic history of this Country, the economy cycles up and down. We are in a down cycle now, but we’ll soon be out of this downturn and property values will go up.