Help! Selling house after devaluation
Question: If I were in this situation, I would simply default on the loan. In fact, >since rents are probably quite a bit lower than your house payment, the sooner >the better.
>The bank cannot atttach personal belongings, and you can protect your savings. >You probably already have credit cards, etc., and you won’t loose those.
>Just walk away from the house and rent something. If you have to, declare >bankruptcy. When the bank loaned you the money, they (not you) invested >the most in the property. Why should you continue to pay the penalty?
>You will pay a penalty in not being able to by another house on 20% down >for the next 7 years, but is that worth the $200 -$400 per month extra you >are paying now? You could save that money in a bank account and have a >25% down payment on your next house. With 25%, banks don’t care what your >credit history is.
Answer: Besides the fact that this is legal but not very ethical, you forgot to mention what 7 years of bad credit will do next time you want to replace your car, or get some type of home improvement loan on the new house, or let prospective employers find out when you apply for a job (some do check, you know), or the fact that after seven years, you are just back to ground zero, not where you are now. What company is going to lend you anything in the way of a credit card if you haven’t had any credit history for the last seven years? It would take about 3 years just to build up your credit history again. Besides, in seven years don’t you think that the oil industry will have rebuilt and that land prices in his area will be booming again? Look at where the oil industry was 7 years ago and compare it to where it is today. People are using more oil, not less, and the prices will eventually come back up and Texas will boom again.
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