One problem is easy to solve - not wanting to move because your house is under water.
It's called "strategic default" walk away from the house, stop throwing good money after bad and three years after your foreclosure you can buy another house.
I did it when my house was $60K under water and I was "prequalified with a contingency" to start the process of getting a house built a month before I was officially qualified to get an FHA loan. The day I was qualified, the lender submitted my loan application.
I had no moral qualms about it. It was strictly a financial decision.
That's definitely an option if your house is in a non-recourse state (which is barely a third of them from what I can tell). If your house in one of the other 33 states and you walk away from an underwater mortgage, the lender can make you pay whatever is left-over on the mortgage after they get the proceeds from the foreclosure sale.
That is a tough pill to swallow, because not only do you lose your house, you have to keep paying a big chunk of your mortgage with nothing to show for it, and because a foreclosure auction is not the most favorable way of selling a house, you might end up even worse off than if you did a short sale.
I’m curious about the moral qualms bit. I suppose I was raised differently (and in NZ/Australia, too) by my parents, but I read an article recently that was on HN about a man who lost maybe $110,000 servicing an underwater mortgage that was due to the GFC. Where do those “morals” stem from?
Some people think it's a moral responsibility to pay back a debt to the bank. The banks had no qualms about taking taxpayers money and paying people millions in bonuses.
The mortgage was a simple contract. If I didn't pay the mortgage they had the right to take the house. They exercised their right.
It's called "strategic default" walk away from the house, stop throwing good money after bad and three years after your foreclosure you can buy another house.
I did it when my house was $60K under water and I was "prequalified with a contingency" to start the process of getting a house built a month before I was officially qualified to get an FHA loan. The day I was qualified, the lender submitted my loan application.
I had no moral qualms about it. It was strictly a financial decision.