By Jeff Curl
Are you sacrificing everything to keep your home? Maybe nothing is going into retirement or your emergency fund. Maybe you are actually taking money out of these sacred cow accounts to make the mortgage payments. Coupled with drops in home prices, many of these homes are underwater. Not to mention a good portion of these mortgages are five-year adjustable rate mortgages (ARM) with waves of adjustments set to push more people a little more cash poor.
I know that it is the “American Dream” to be a homeowner and there is a lot of emotional attachment that goes along with a place where your children grew up. A place you’ve lived in for years. It’s your home. I get that.
But is it worth it? The lopsided dedication to a home seems to cause a lot of pain for less and less gain. I have clients working second and third jobs to keep homes. Many of these homes are so upside down will most likely never appreciate enough to make it worthwhile to keep. In this continuing struggle, they don’t have the cash flow for unexpected events that are inevitable such as car repairs or attending a family emergency. And there are certainly non-economic factors that deserve consideration. For example, a stable family environment, good school district, the cost of a mortgage versus rental prices can make keeping a home worth some of the costs.
But here’s the rub in today’s market. Many people are not even house rich with so many home values below what you paid. Many homeowners are finding themselves house poor and cash poor. And many are making themselves more cash poor by continuing to invest in a home with no equity.
If you are struggling to keep a home, and you are not even “house rich” at this point, it may be time to examine if the stress of a keeping a poor investment at all costs is worth it.
