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Is Walking Away From Your Mortgage OK?

walking away from your mortgage

The scourge of foreclosures has brought a lot of moral issues to the forefront. If you ask the average person if it’s OK to simply stop paying your mortgage, you may get an answer are unique as the person who gave it. The answer largely depends on the circumstance around the foreclosure. With so many mortgages in foreclosure, you probably know someone who this has happened to. Even those who don’t go through foreclosure are still vulnerable to the current mortgage conditions.

Foreclosure Rate: Bad But Getting Better

The epidemic of foreclosures is finally getting better and is at a six-year low according to RealtyTrac. However, millions are still walking away from their homes, and millions more are underwater.

Are You Underwater?

If you owe more on your house than your house is actually worth, you may feel like you’re underwater. With excess borrowing against equity and falling home prices, this situation has reached epidemic proportions. There aren’t just a few people in this situation or even a few million people. One-quarter of all families is underwater, with negative equity in their own homes.Millions of others have “effective” negative equity.

The states with the worst numbers of people underwater are Florida, Wisconsin, Nevada, California and Arizona. By far, the worst state for this situation is Nevada. In Nevada, 65 percent of borrowers owe more on their mortgage than their house is worth. What should homeowners do in this situation? Should they continue to pay? Or, do you think they should they simply chuck it all and stop all payments? Would you?

Thinking About Walking Away From a Mortgage?

If you have already formed an opinion about whether it’s OK to ditch a mortgage or not, you’re not alone. Everyone has an opinion on this. In the first quarter of 2011, 27% of home owners who were underwater said it was OK to walk.

Is It a Moral Issue?

Some homeowners believe that whether or not to pay is a moral issue. Their own values and ethics come into play, telling them that someone who signed a contract should see it through, regardless of how home prices have fallen. The mortgage industry loves this line of thinking. In fact, they are encouraging the idea that paying is a moral obligation.

What people believe about this issue often comes down to their age and gender. To see what age groups and genders believe it’s OK to walk away, click on the graphic. Men and women aren’t as far apart on this issue as you may think. Many people of both genders believe that if your financial circumstances are dire, it may be OK to ditch that mortgage. Do you agree with your peers? Check out the graphic above and see.