Here's an interesting article, with a twist on the current plummet of RE values in many areas. Seems folks finding themselves heavily upside down on loans, are simply walking away - even though they have the ability to pay. They'll simply purchase something elsewhere cheaper while credit is good, then walk away from the original home.
My first reaction was pretty much negative...but after reading an affected owner's response in the above article, I find it an interesting mental excercise, if nothing else.
Why attach some sort of moral obligation of repayment to a home loan? As the quoted guy mentions, he seems to have no illusion he entered into his financial obligation willingly. But given the recent turn of events, he views it as strictly a business decision gone bad. If the cost of foreclosure (bad credit for a period of time, in his case) is less than a current or future expected loss when selling, he made a sound move by walking away.
While such a situation doesn't apply to me, I could see how this decision might get further complicated when considering when to ER. Suppose all of your ducks are lined up...your investments/pensions are sufficient to sustain you, but you can't take the financial hit when selling your existing home.
Would you walk away younger taking any penalties associated with forclosure, or stick around in your day job until you figured out how to pay the piper?
Me - I'm somewhat ashamed to admit it, but I'd probably bail on the house. Quality of life vs. financial obligation seems like such an easy decision.
My first reaction was pretty much negative...but after reading an affected owner's response in the above article, I find it an interesting mental excercise, if nothing else.
Why attach some sort of moral obligation of repayment to a home loan? As the quoted guy mentions, he seems to have no illusion he entered into his financial obligation willingly. But given the recent turn of events, he views it as strictly a business decision gone bad. If the cost of foreclosure (bad credit for a period of time, in his case) is less than a current or future expected loss when selling, he made a sound move by walking away.
While such a situation doesn't apply to me, I could see how this decision might get further complicated when considering when to ER. Suppose all of your ducks are lined up...your investments/pensions are sufficient to sustain you, but you can't take the financial hit when selling your existing home.
Would you walk away younger taking any penalties associated with forclosure, or stick around in your day job until you figured out how to pay the piper?
Me - I'm somewhat ashamed to admit it, but I'd probably bail on the house. Quality of life vs. financial obligation seems like such an easy decision.