Should You Stay in Your Home or Walk

You are upside down in your mortgage. You will never claw back that hundred grand in lost equity. You say well this is my home. Your taxes are high. They will never come down. Your mortgage is high and worse you cannot refinance because your house is inverted. You are stuck in an over valued asset that is bleeding you dry and you are on the same footing as a renter. In fact it is worse than a renter. You owe the bank for the full amount of your mortgage. A phantom tied to a value that vanished five years ago. Should you stay or go?

Ten million people are facing this dilemma. When rich people have a bad investment they walk. Middle class  morality does not exist .But for the millions stuck in upside down homes there is really only two options .Keep paying on a depreciating asset if you can or you walk out of your house and start over. A short sale perhaps. A deed in Lieu (give it back to the bank) Or good old foreclosure where you get to squat for a couple years before your house goes to auction.

These are the options for a large segment of the population and none of them are good. Walk and your credit is trashed. Stay and have nothing to show. Strategic default is what they call walking now. Jingle Mail. Everyone one has to face this one and figure out their own bailout plan. But sitting will only work so long. If you take your medicine then you can start over. Don't take your medicine and stick it out and hope values could come back. Not likely.

So there it is. Stay or Go. The medicine is bitter but waiting only prolongs the disease.

Rocket Man...the American dream upside down

 

The New American Dream: Downsizing

It is the first thing off someones lips who is selling their home now. I'm downsizing. Used to be people whose kids had gone off to college would downsize, now everyone is doing it. Apologies to all those still in search of the perfect McMansion, but everyone I bump into including myself talks about one thing: getting into something smaller with less taxes and less mortgage. It has become the new American Dream.

In my last novel, Rocket Man, the main character finally  gets his dream and is able to short sale his house away and go back toward the city and live in a bungalow. This is the polar opposite of the steady march of America which probably began with the first Puritans who decided a bigger log cabin was better and from then on the implied assumption was that materialism was next to Godliness and a big house put you into the Big Mans Favor.

Gatsby, right? Jay Gatsby's pride and joy, his magnet for Daisy was his home. A mansion he resurrected on the Long Island sound to show the world he had made it. The American Dream was at its zenith during the twenties and there was nothing more American than a bigger home. Bigger does not only belong to Texas, it is wrapped up in the swagger of American prowess. Let the Europeans live in their bungalows and row houses...we live in Giant Homes. We live in mansions.

But then of course that all came crashing down much like the Hindenburg with all the concomitant horror. Suddenly the big house no longer represented prosperity or at least upward mobility, now it had become an albatross around our neck...a prison of debt and sinking good fortune. Our homes could literally make us homeless now with the specter of upside down mortgages and foreclosure.

So the race is on to downsize. Who knows where it will end, but like Dale Hammer says at the end of Rocket Man  and is sitting in the small yard of his new home: I was finally where I was meant to be.

Lucky him.

http://www.billhazelgrove.com/
Rocket Man


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