With the Colorado Springs Real Estate Market being down from 2006, does it make sense to simply walk away? Lets take a closer look.
Certainly the vast majority of homeowners who foreclose have no other option. Economic conditions have left them a choice: Either buy groceries and keep the heat on or, pay the mortgage. A simple choice.
On the other hand there is a growing trend of "Strategic Defaults": Where a homeowner simply walks away bacause the debt on the home is greater than the value. Recent studies show that approximately 1 out of 4 foreclosures fit in this category.
While some may advocate this strategy, there are pitfalls: Credit rating will be impacted and the ability to buy again may not become a reality for as long as 7 years or more.The possibility of the bank filing a judgement, especially in those cases where the owner's income is good, is possible. You leave yourself at the mercy of the rental market. Risk of rising rents is a real possibility due to increasing demand because of tougher loan qualification guidelines, more former homeowners needing housing and the possibility of increasing interest rates.
Although real estate prices have dropped substantially, historically speaking, they have always come back. There is no reason to believe that they won't again. A "Strategic Default" may be viewed as the same as selling at the bottom of the stock market.
Other options to a "Strategic Default" may be: Simply staying and riding it out, renting it or a loan modification. Certainly, when looking back, there will be sense of gratification in knowing you survived the tough times and made good on your mortgage commitment.
Opinion by William Szilagyi WilliamsHomeSellers LLC www.ZColorado.com www.WilliamsHomeSellers.com 719-646-2634
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