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Don't forget that there are also thousands of homes being foreclosed on where the homeowner was being savvy about the mortgage contract.<br> <br> There's a clause in most mortgages that says once the bank takes possession of the house through foreclosure, the homeowner has no more responsibility to the mortgage. The mortgage is treated as settled from that point.<br> <br> If you have a $300,000 outstanding balance on your mortgage, and the housing bubble where you live bursts, and suddenly that $375,000 house only appraises for $250,000. You're $50K upside down on the mortgage. If you sell the house and move to something more affordable, you still carry that $50,000 "negative equity" to your next mortgage - unless you've got the cash on hand to cover it. Who knows how long it will take the market to recover that kind of value for you, if it ever does.<br> <br> Or you could walk away from the house. You stop paying your mortgage, and 8 months later when the bank is finally able to foreclose and kick you out, they take possession of the house, and the mortgage is satisfied. That $50,000 you were upside-down on the loan just disappears.<br> <br> Your credit gets dinged with a forclosure, but you just saved yourself the $50,000 AND if you were smart and put your mortgage payments into your savings account over those 8 months, you may even have an additional $20,000 cash that you wouldn't have had otherwise. You just cut your losses on the mortgage by $70,000. Quite frankly, that can be a financially smart move.<br> <br> The foreclosure on your credit report will hurt for a while, yes, but with as many as are happening these days, it probably won't hurt as bad as it used to. People will just figure you got caught up in the whole foreclosure mess like hundreds of thousands of other people. Hey, stuff happens - right? You've still god a good job and a good income and will likely still be able to rent a very nice apartment to live in until you can secure a new home mortgage.
By Steve
Search Boortz.com
