Monday, June 9, 2008

The "Walk Away" Myth

Maybe you’ve heard about the disturbing new “trend” of people who can afford to pay their mortgages just walking away from their homes that have declined in value. As it turns out, it’s a whole lot of nothing.

The vast majority of people who are giving homes back to the bank were investors and/or speculators to begin with, and often they had been involved in fraudulent transactions. The others are the homeowners who are losing their houses because they can no longer afford the payments due to ARM adjustments (in some cases they had been involved in fraudulent transactions as well).

As this article points out, historically (as well as currently, according to actual facts) people will do just about anything to keep their homes – certainly they don’t destroy their credit and become renters (or homeless) just because of an unfortunate blip in market values.

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Purchase costs are the costs you incur when you go to the closing for the home you are purchasing. This includes the down payment and typical closing costs.

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