Home values are a little hard to really pinpoint these days. Many homeowners are feeling frustrated in these times with seemingly declining values. They tend to feel like they are making a mistake to stay in a home that is no longer “worth” what they paid for it.
I have heard that a growing trend is for homeowners to just walk away from their homes, not because they lost their job or that they can no longer afford to make the payment, they choose to walk away and be foreclosed on simply because they feel like it is not in their best interest to keep it. I personally believe this is wrong and shows a lack of integrity. My feelings aside, I would like to make a few points for hanging on and waiting this current market out.
You have to live somewhere. What is your mortgage payment compared to what you would have to pay in rent if you walk away. When the real estate market is struggling, rent prices tend to go up because people rent instead of buy.
I have also heard that it is a growing trend to buy a second home before selling the old one, telling the new potential mortgage company that the plan is to rent out the old one, then once in another home, let the old one go to foreclosure… never actually intending to rent. They lied on their loan application! THIS IS LOAN FRAUD and it is ILLEGAL!!!
When you have a foreclosure on your credit history, it will haunt you for at least 7 years. Credit scores are important for more than buying another home. Even insurance companies will look at your score. They have found direct correlations between people with good credit scores and insurance risks.
Even if your home is worth less right now, history has shown that home values will always eventually go up again. Homes have always been considered a good investment. If history tells us anything, prices will start to rise again. Just before things went crazy, Utah County stayed at approximately a 2% appreciation rate for about 15 years and homeowners/sellers were happy with that. Values will start to appreciate again. We have seen it already in some price ranges.
Finally, why did you buy your home? You most likely looked at several houses and picked the home that was the best value—in your mind—compared to the other homes you looked at. You picked the one that “spoke” to you. It had more charm and warmth than the others. You chose the house that felt most like ”home” to you.
If that “home” feeling did not have any value, we could all buy homes sight unseen. Four walls and a roof would be all we need but we all know that isn’t the way it is.
If your house is (temporarily) not worth what is was a year or so ago, hang on. In your heart, you know how much your “HOME” is worth.