Let's look at the situation around one person who did just that.
Spenser was a salesman for a manufacturer. He decided to just walk away from mortgage debt.
In 2004, he got a promotion and relocated southern California. He sold his Nashville, TN house and made a down payment on a more expensive home in Ontario, CA. The new home was $650,000 and he managed to come up with the 20 percent down through the sale of the Tennessee home.
Over the next few years, life was good. He and his wife Jennifer had a baby girl, Katelyn. Commissions were regular and his house was appreciating. He took out a second on the house and put in a lush pool and recreation area in his back yard. At this point, the house was pushing the million dollar mark.
Then, late in 2007, he was promoted to regional vice president, a job that required him to move to Salt Lake City.
He put his house on the market and bought a new home in Salt Lake.
He knew that the housing market had dropped from its high and he priced the home at $799,000 - which was under what realtors said it was worth.
Spenser then reduces the price two more times. Eventually, it is priced at $615,000 which is less than he originally paid for it in 2004 and that was before the pool was put in.
He asks his real estate agent why the house isn't moving. She says, “it's because there are foreclosures all over the neighborhood. The banks are selling these for ridiculously low prices. Just hang on. "
But Spenser, who has never had a late payment in his life, can't hang on any longer. He's got two mortgages and a young family.
He decides to refinance and get a renter.
Imagine his surprise when he finds out that the refinance appraiser reports that the house is worth $20,000 less than he owes!
In addition, when he finds out that the current market rent is $1000 less than his mortgage amount, he throws in the towel.
Of course he should just walk away from the mortgage. He'd be an idiot to hang on when he could be putting that house payment into a mutual fund and make hundreds of thousands of dollars in the same period.
So, when you ask yourself if you should just walk away from mortgage debt when all of the circumstances point to it, you should know that you're not along in asking the question. And people like you are just walking away from mortgage debt.
If you want to find out more about how you can just walk away from mortgage debt, or explore any of your other options when faced with two house payments, get your copy of The Foreclosure Survival Guide .
This report walks you though the process of foreclosure and details your many options. The Foreclosure Survival Guide is brand new for 2008. Get your free copy today.