30 Nov Surrendering Your Home In Bankruptcy Depends On Whether You Can Afford To Keep It
It is said that the decision to purchase a home is the largest decision and largest single investment that most people will ever make. So, it stands to reason that the decision to surrender a home in bankruptcy will be an even bigger decision in this economy.
Many people are wondering if they will ever be able to purchase another home or if they will ever want to own again. These questions are all relative to your current financial condition, your three (3) year future financial condition and your five (5) and ten (10) year future financial condition. But, in the short term, people tend to cloud the issue of whether surrendering their home now in a bankruptcy would be a smart financial decision. So let’s start with the financial reasons:
The question that you must ask your self is: Can I afford to keep this home?You must answer this question honestly. The answer is not as simple as you think. If you can afford to make the monthly payments now, you have made it over the first hurdle. Hopefully, your monthly payment that you can afford to make includes the property taxes and insurance. If you are like me, and you don’t allow the mortgage company to handle the property taxes and insurance, you will have to squirrel away money all year long to pay the property taxes and homeowner’s insurance. Again, if you are able to meet these obligations, you are ahead of the game, but not out of the woods yet.
Many homes in Southwest Florida are currently $100,000.00 underwater, which means that the homeowner owes $100,000.00 more than the current market value of the home. So, selling right now is not really a good option unless you absolutely have to or you are doing a short sale.
Now, you have to ask yourself an even harder question: Yes, I can afford to make the monthly payments on this home, but is it a good investment that I should keep throwing money at?
The answer to this question is going to take some thought. The reason why I think this question hurts so bad is that two years ago people were bragging about the equity in their homes, and it became a sort of talking point for most people. Even today, when I ask someone how much their homes are worth, they start with: Well two years ago, the home appraised for $…….. . Of course, I am not concerned about what the home was worth two years ago, I am concerned about what the home will sell for today.
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