In the past, I have been through on a local level what the country is now facing as a whole. It is the main reason I was apprehensive about buying a home of my own, and ended up buying a major fixer upper when we finally did (we hoped that if we put cash into the repairs, that we would always be right-side-up).
Back when I was a young person, watching my community fall apart due to upside-down loans and foreclosures- and worse yet, many jobs lost, it definitely made an impression on me. What we saw often was people buying a second house elsewhere before allowing the first to fall into foreclosure- that way they were already in another loan before the bad mark hit their credit. I also saw many people who stayed upside-down on their loans for 10 years or more before the market came back and they were once again in the black. Now, nearly 20 years later, even with the market tanking again, those house values are still way up over where they were 20 years ago during the previous housing recession; the people who stayed in their homes, even when values were less than they owed, are now in good shape. It will likely be the same scenario this time around.
From a purely logical standpoint, walking away seems to make sense, but from a moral standpoint of responsibility and integrity it may not be so easy. My biggest fear has always been being upside-down on a house and HAVING to sell at any cost. If you plan to stay in this house for another 10 years, and you can afford the payments, then I would encourage you to stay put and let the market work itself out.
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