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Millions of American families are navigating this troubled economy and one difficult decision they face is continue to make their payments or conserve what they have left. The latter has a high risk of derogatory credit and foreclosure. So the burning question when faced with this dilemma is “Should I stay or should I go” or should I refi my home?

The facts are that many people took cash out, borrowed more than they can afford, took teaser rates, or applied using some form of a stated income loan which would often over inflate the borrowers actual income through the home refinance or home purchase process. Values for most people’s homes has decreased which is adding fuel to a crumbling US economy, and now those same people can’t refinance or sell their homes. When a borrower decides to vacate the property the bank is just taking the house through foreclosure. Is this the right move?

I don’t have the right or wrong answer here but I do know that up until the 90’s most people bought a house as a place to live and somewhere to stay and raise a family.I can understand that you may look at that as a traditional frame of mind, but it’s a fact of our present situation.Increases in home values rose a bit faster than anticipated through out the 90′s to about 7% a year.  Lending practices began to recover from the S/L crisis and a new way of thinking was born in the lending world. Can you hear me?Do you have a FICO score? Then we can presume you can pay for a home.With that the mid 90′s saw lower home prices and stated income was normal and accepted.But the exposure is there as national values increased at an unprecedented rate, and people use that equity to buy expensive toys. These items were usually paid for with the home’s equity, creating a false sense of financial security.

 

Fast forward about 10 years to 2008 we are all faced with the dilemma should I stay or should I go.With current lending standards I can just walk away and in theory buy the house or another house lower than what the value is now in 2 years.  This is all true you can walk, you could buy your home for less, but do you really want to?Responsibility lies in the agreement borrowers sign at closing, the media frenzy is only encouraging people to walk away from there obligations.   Again You knew what you were doing when you took the cash out home refinance, you knew what you were doing when you bought the home, don’t bring everybody else down even further as somewhere along the line we must just stop this madness.It is possible for all of us to avoid a depression by starting with our mortgages; we all need to take responsibility.