Even in today’s economy if you can afford to hold on to your home—do it. It may seem futile to stay in a home that has a negative equity value thanks to the current housing crisis and it can be depressing to pay the mortgage with that situation. Take heart though, your home still has many aspects worth making those payments.
Home Sweet Home
Your home is still your haven. Everyone needs a place to live; if you are comfortable in your home (and since you bought it originally we’ll assume you do like it) and can afford to stay in it, walking away just doesn’t make sense. Many people are losing their homes because they can’t afford the mortgages and that is a different issue entirely, but walking away from a home you can afford just because the market is rough is not a smart move.
Your home still has asset value when it comes to your credit rating. How you make your payments speaks volumes and can only help you. On top of that the fact that you do own a piece of real estate is still a worthy asset on your books. No one has to know what it was once worth. This is especially true if you haven’t gotten to the upside down possibility where you owe more than your mortgage, but it is still true if your home’s value is beneath what your existing mortgage is.
If you have the money to do it paying down your mortgage to below the current property value is a good move to make your home show a positive equity, but it isn’t a necessity and many people now simply can’t afford to do that.
If you own a home and are paying a mortgage note you are also reaping the benefits at tax time. If you sell your home, profit or not, and cannot afford to buy a new home or get the financing to do so and have to move into a rental, you may lose the tax advantages of paying on your mortgage.
Back to the Future
The current real estate environment will not last forever—it can’t. It will recover, and when it does, so will your home’s value. You will be in a much better position than those that ran from their homes at the first sign of trouble.