Over one in four homeowners in the U.S. with a mortgage are “underwater” meaning they owe more on their homes than they are currently worth and, according to data just released from a survey by Zillow, 75 percent of them are underwater by 40 percent or more meaning it will most likely be many years until they even have the hope of seeing equity in their home again. Nonetheless, this has not deterred the majority of these underwater homeowners from “staying the course” as 59 percent said would not consider a strategic default in order to get out from under their home.
So, why not do a strategic default, or walk away?
The most common answer given by underwater homeowners for why they would not use a strategic default to get from under their homes was for moral reasons (37 percent) followed closely by those that said it didn’t make sense given that they intended to live in their current home for a long time (35 percent).
Economists surveyed don’t think strategic default is the best option either…
Zillow also surveyed economists around the country to get their take on whether underwater homeowners should consider a strategic default and nearly three-fourths of them (71 percent) said they would not strategically default, even if they owed on their mortgage at least 40 percent more than the current value of their home. There are many differing opinions on this topic and a while back I wrote about it giving differing points of view.
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