Should You Walk Away from Mortgage Debt You Can’t Afford? - Black Enterprise

Ask the Money Coach: Should You Walk Away from Mortgage Debt You Can’t Afford?

If you’ve been struggling to keep up with mortgage payments for a while and simply can’t afford your home loan, walking away from that mortgage may be a last resort.

In the wake of the recession, millions of Americans have had to give up the American dream of living in their own house and have been forced into foreclosure or bankruptcy.

Others have voluntarily left their residences — often due to underwater homes, or properties where the borrower owes more on the mortgage than the home is worth.

Walking away from a mortgage can be an attractive option for those who simply can’t keep up with their payments. If you can afford payments but choose not to, it’s known as a “strategic default”. Results of Fannie Mae’s National Housing Survey reveal that 27 percent of underwater homeowners say it’s okay to walk away from a mortgage if they were facing financial distress.

Is it the right strategy for you? Here are a few reasons you should consider strategic default, along with several reasons you shouldn’t’: