Many potential clients come into my office with high payments on a home that was recently purchased but one which they really can not afford to keep. The almost universal response to the home ownership question is “I cannot give up my home!!”. But, even under the best of cases, the potential client can not make a plan work with their income.
I have seen several clients work two full time jobs in an effort to keep a home that is just too much. Not only is this practice bad for your health, the client never sees their family or when they are home, they are too tired to do anything but sleep. Working oneself to death and depriving your children and spouse of your “family time” is not beneficial in the long run.
However, with the possibility that Congress may soon pass an amendment to the Bankruptcy Laws which will give the Bankruptcy Judges the ability to modify home mortgages by reducing the principal, reducing interest rates, and/or changing from an ARM to a Fixed rate mortgage, many of these potential clients may feel that to opt for a Bankruptcy and mortgage modification may be a way to actually keep their home.
But the question is, “is your home actually worth keeping?” If you think about it in purely financial terms, the smart decision may be to just let the bank foreclose.
Consider the following:
After the modification,
- Will your payments still be too high?
- Will you still be “underwater” for years?
- Will you be better off just renting?
If you decide to try to keep your home in today’s market you should ask yourself these question;
- Can you keep your home without invading your retirement funds?
- Can you make your mortgage payments while meeting your other obligations?
- Is there a rescue in sight?
After looking at the options, you might decide to just walk away from the mortgage. The bankruptcy courts may not only help you to keep your home but can help if you decide to just walk away.
Whatever you decide, you need to consider what is best for you and your family.