If you're underwater — that is, you owe more on your home than it's worth — a University of Arizona law professor, Brent White, can help you sort out your options.
In his new book, "Underwater Home: What Should You Do if You Owe More on Your Home than It’s Worth?" Professor White outlines "when it makes financial sense to stay in your underwater home and when it makes sense to get out."
The guidelines and calculations he suggests in his book go beyond just entering your situation into an online tool like the one offered by YouWalkAway.com, which we covered in a Bucks post earlier this year.
Professor White has agreed to summarize for Bucks readers when walking away generally does, and doesn't, make financial sense.
According to his book, "it probably does not make financial sense to default on your mortgage" and walk away under these circumstances:
1. You’re less than 10 percent underwater (you owe $100,000, for example, and your house is worth $95,000); or
2. Your monthly cost of owning is less, or only slightly more, than the cost of renting. In other words, the net cost of owning your home (your monthly mortgage payment plus all other ownership costs minus any tax breaks you get from owning) is less, or only slightly more, than the cost of renting your home or an equivalent home (Professor White details how to make such calculations in the book); and
3. You don’t need to move.
In addition, Professor White writes that it probably doesn't make sense to default if you fit certain other conditions, like you "have a particular need for credit," feel that your house is worth what you paid or you're employed and know for certain that your credit score affects your employability, among other conditions.
He writes that it may make financial sense to default under these circumstances:
1. You’re more than 10 percent underwater; and
2. You’re paying significantly more on a monthly basis than you would to rent a similar home; and
3. One or more of the following factors applies: "you're struggling to make ends meet," you're using your savings or retirement money to make mortgage payments, or you need to move for a new job.
When do you think underwater homeowners should stay in their homes?
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Related Article »If you're underwater — that is, you owe more on your home than it's worth — a University of Arizona law professor, Brent White, can help you sort out your options.
In his new book, "Underwater Home: What Should You Do if You Owe More on Your Home than It’s Worth?" Professor White outlines "when it makes financial sense to stay in your underwater home and when it makes sense to get out."
The guidelines and calculations he suggests in his book go beyond just entering your situation into an online tool like the one offered by YouWalkAway.com, which we covered in a Bucks post earlier this year.
Professor White has agreed to summarize for Bucks readers when walking away generally does, and doesn't, make financial sense.
According to his book, "it probably does not make financial sense to default on your mortgage" and walk away under these circumstances:
1. You’re less than 10 percent underwater (you owe $100,000, for example, and your house is worth $95,000); or
2. Your monthly cost of owning is less, or only slightly more, than the cost of renting. In other words, the net cost of owning your home (your monthly mortgage payment plus all other ownership costs minus any tax breaks you get from owning) is less, or only slightly more, than the cost of renting your home or an equivalent home (Professor White details how to make such calculations in the book); and
3. You don’t need to move.
In addition, Professor White writes that it probably doesn't make sense to default if you fit certain other conditions, like you "have a particular need for credit," feel that your house is worth what you paid or you're employed and know for certain that your credit score affects your employability, among other conditions.
He writes that it may make financial sense to default under these circumstances:
1. You’re more than 10 percent underwater; and
2. You’re paying significantly more on a monthly basis than you would to rent a similar home; and
3. One or more of the following factors applies: "you're struggling to make ends meet," you're using your savings or retirement money to make mortgage payments, or you need to move for a new job.
When do you think underwater homeowners should stay in their homes?
Children often ask tough questions about money. In a series of posts this month the Bucks blog will discuss them one by one. We invite you to answer a few yourself or suggest new ones that your children have asked.
Paul Sullivan writes about the strategies that the wealthy use to manage their money and their overall well-being.
All of us need to take some time every so often to knock things off of our financial to-do list. To help, we've created a series of articles and an interactive checklist to get you started.
Increasing your savings by one more percentage point "“ or even better, another percentage point a year "“ can add up to big additional savings over time.
An interactive tool to estimate the future cost of higher education.
Compare the cost of renting and buying equivalent homes.
See how long it could take for your portfolio to return to its peak value.
January 25
How Charities Used Donations for HaitiA rundown of how some highly rated charities spent donations to help Haiti.
January 25 //
When Not to Walk Away From a MortgageIn a new book, a University of Arizona law professor, Brent White, offers guidelines on when it does, and does not, make sense for underwater homeowners to walk away from their homes.
January 25 //
Tuesday Reading: Tracking Tax RefundsAn I.R.S. app for tracking tax refunds, the end is near for hotel deals and other consumer-focused items from Tuesday's New York Times.
January 24 //
When to Sell Your StocksA hint: It has less to do with price-to-earnings ratios and more to do with goals and plans that are much more qualitative.
January 24 //
American Express’s New Service for Its Wealthiest CardholdersAmerican Express will help Black Card holders negotiate prices on luxury automobiles.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 74 BUDGETING 60 TAXES 58 CHECKING ACCOUNTS 56 RETIREMENT 48 MORTGAGES 46 INVESTMENTS 41 BUYING A HOME 41 DEBIT CARDS 39 SAVINGS ACCOUNTS 38 STUDENT LOANS 37 HEALTH INSURANCE 31 STOCKS & BONDS 29 401(K)'S 27 DISCOUNTS 27 PAYING FOR COLLEGE 25 MUTUAL FUNDS 24 EXCHANGE TRADED FUNDS (E.T.F.'S) 24 PHILANTHROPY 19 HEALTH EXPENSES 18 ASSET ALLOCATION 17 IDENTITY THEFT 17 HOME INSURANCE 17 NEW YEAR'S RESOLUTIONS 15 RELATIONSHIPS 15 I.R.A.'S 13 BUYING A CAR 13 DIVORCE AND MONEY 13 GAY & LESBIAN 13 BROKERAGE FIRMS 12 Who's Who at BucksJennifer Saranow Schultz is a freelance journalist based in San Francisco.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTanzina Vega is a Web producer at The Times.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');A rundown of how some highly rated charities spent donations to help Haiti.
January 25
When Not to Walk Away From a MortgageIn a new book, a University of Arizona law professor, Brent White, offers guidelines on when it does, and does not, make sense for underwater homeowners to walk away from their homes.
January 25 //
Tuesday Reading: Tracking Tax RefundsAn I.R.S. app for tracking tax refunds, the end is near for hotel deals and other consumer-focused items from Tuesday's New York Times.
January 24 //
When to Sell Your StocksA hint: It has less to do with price-to-earnings ratios and more to do with goals and plans that are much more qualitative.
January 24 //
American Express’s New Service for Its Wealthiest CardholdersAmerican Express will help Black Card holders negotiate prices on luxury automobiles.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 74 BUDGETING 60 TAXES 58 CHECKING ACCOUNTS 56 RETIREMENT 48 MORTGAGES 46 INVESTMENTS 41 BUYING A HOME 41 DEBIT CARDS 39 SAVINGS ACCOUNTS 38 STUDENT LOANS 37 HEALTH INSURANCE 31 STOCKS & BONDS 29 401(K)'S 27 DISCOUNTS 27 PAYING FOR COLLEGE 25 MUTUAL FUNDS 24 EXCHANGE TRADED FUNDS (E.T.F.'S) 24 PHILANTHROPY 19 HEALTH EXPENSES 18 ASSET ALLOCATION 17 IDENTITY THEFT 17 HOME INSURANCE 17 NEW YEAR'S RESOLUTIONS 15 RELATIONSHIPS 15 I.R.A.'S 13 BUYING A CAR 13 DIVORCE AND MONEY 13 GAY & LESBIAN 13 BROKERAGE FIRMS 12 Who's Who at BucksJennifer Saranow Schultz is a freelance journalist based in San Francisco.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTanzina Vega is a Web producer at The Times.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');In a new book, a University of Arizona law professor, Brent White, offers guidelines on when it does, and does not, make sense for underwater homeowners to walk away from their homes.
January 25
Tuesday Reading: Tracking Tax RefundsAn I.R.S. app for tracking tax refunds, the end is near for hotel deals and other consumer-focused items from Tuesday's New York Times.
January 24 //
When to Sell Your StocksA hint: It has less to do with price-to-earnings ratios and more to do with goals and plans that are much more qualitative.
January 24 //
American Express’s New Service for Its Wealthiest CardholdersAmerican Express will help Black Card holders negotiate prices on luxury automobiles.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 74 BUDGETING 60 TAXES 58 CHECKING ACCOUNTS 56 RETIREMENT 48 MORTGAGES 46 INVESTMENTS 41 BUYING A HOME 41 DEBIT CARDS 39 SAVINGS ACCOUNTS 38 STUDENT LOANS 37 HEALTH INSURANCE 31 STOCKS & BONDS 29 401(K)'S 27 DISCOUNTS 27 PAYING FOR COLLEGE 25 MUTUAL FUNDS 24 EXCHANGE TRADED FUNDS (E.T.F.'S) 24 PHILANTHROPY 19 HEALTH EXPENSES 18 ASSET ALLOCATION 17 IDENTITY THEFT 17 HOME INSURANCE 17 NEW YEAR'S RESOLUTIONS 15 RELATIONSHIPS 15 I.R.A.'S 13 BUYING A CAR 13 DIVORCE AND MONEY 13 GAY & LESBIAN 13 BROKERAGE FIRMS 12 Who's Who at BucksJennifer Saranow Schultz is a freelance journalist based in San Francisco.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTanzina Vega is a Web producer at The Times.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');An I.R.S. app for tracking tax refunds, the end is near for hotel deals and other consumer-focused items from Tuesday's New York Times.
January 24
When to Sell Your StocksA hint: It has less to do with price-to-earnings ratios and more to do with goals and plans that are much more qualitative.
January 24 //
American Express’s New Service for Its Wealthiest CardholdersAmerican Express will help Black Card holders negotiate prices on luxury automobiles.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 74 BUDGETING 60 TAXES 58 CHECKING ACCOUNTS 56 RETIREMENT 48 MORTGAGES 46 INVESTMENTS 41 BUYING A HOME 41 DEBIT CARDS 39 SAVINGS ACCOUNTS 38 STUDENT LOANS 37 HEALTH INSURANCE 31 STOCKS & BONDS 29 401(K)'S 27 DISCOUNTS 27 PAYING FOR COLLEGE 25 MUTUAL FUNDS 24 EXCHANGE TRADED FUNDS (E.T.F.'S) 24 PHILANTHROPY 19 HEALTH EXPENSES 18 ASSET ALLOCATION 17 IDENTITY THEFT 17 HOME INSURANCE 17 NEW YEAR'S RESOLUTIONS 15 RELATIONSHIPS 15 I.R.A.'S 13 BUYING A CAR 13 DIVORCE AND MONEY 13 GAY & LESBIAN 13 BROKERAGE FIRMS 12 Who's Who at BucksJennifer Saranow Schultz is a freelance journalist based in San Francisco.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTanzina Vega is a Web producer at The Times.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');A hint: It has less to do with price-to-earnings ratios and more to do with goals and plans that are much more qualitative.
January 24
American Express’s New Service for Its Wealthiest CardholdersAmerican Express will help Black Card holders negotiate prices on luxury automobiles.
Featured Posts How to Deal With Tainted Drywall // Tag List CREDIT CARDS 74 BUDGETING 60 TAXES 58 CHECKING ACCOUNTS 56 RETIREMENT 48 MORTGAGES 46 INVESTMENTS 41 BUYING A HOME 41 DEBIT CARDS 39 SAVINGS ACCOUNTS 38 STUDENT LOANS 37 HEALTH INSURANCE 31 STOCKS & BONDS 29 401(K)'S 27 DISCOUNTS 27 PAYING FOR COLLEGE 25 MUTUAL FUNDS 24 EXCHANGE TRADED FUNDS (E.T.F.'S) 24 PHILANTHROPY 19 HEALTH EXPENSES 18 ASSET ALLOCATION 17 IDENTITY THEFT 17 HOME INSURANCE 17 NEW YEAR'S RESOLUTIONS 15 RELATIONSHIPS 15 I.R.A.'S 13 BUYING A CAR 13 DIVORCE AND MONEY 13 GAY & LESBIAN 13 BROKERAGE FIRMS 12 Who's Who at BucksJennifer Saranow Schultz is a freelance journalist based in San Francisco.
Posts | E-mail | BioTara Siegel Bernard is a personal finance reporter for The Times.
Posts | E-mail | BioRon Lieber writes the Your Money column, which appears in The Times on Saturdays.
Posts | E-mail | BioTanzina Vega is a Web producer at The Times.
Posts | E-mail | Bio .partnerHeadlines .story { padding: 0; } .partnerHeadlines .story .date { font-size: 1em; /* 10px */ color: #808080; margin: 0; } Archive Select Month January 2011 December 2010 November 2010 October 2010 September 2010 August 2010 July 2010 June 2010 May 2010 April 2010 March 2010 February 2010 January 2010 December 2009 November 2009 October 2009 Follow The New York Times »FacebookTwitterYouTubeRSS Home World U.S. N.Y. / Region Business Technology Science Health Sports Opinion Arts Style Travel Jobs Real Estate Autos Back to Top © 2011 The New York Times Company Privacy Your Ad Choices Terms of Service Corrections RSS First Look Help Contact Us Work for Us Advertise Site Map if (typeof NYTD.Blogs.user != 'undefined') { if(NYTD.Blogs.user.isLoggedIn()) { var dcsvid=NYTD.Blogs.user.getId(); var regstatus="registered"; } else { var dcsvid=""; var regstatus="non-registered"; } } var gaJsHost = (("https:" == document.location.protocol) ? "https://ssl." : "http://www."); document.write(unescape("%3Cscript src='" + gaJsHost + "google-analytics.com/ga.js' type='text/javascript'%3E%3C/script%3E")); var pageTracker = _gat._getTracker("UA-4406282-98"); pageTracker._initData(); pageTracker._trackPageview(); document.write('');American Express will help Black Card holders negotiate prices on luxury automobiles.
Jennifer Saranow Schultz is a freelance journalist based in San Francisco.
Tara Siegel Bernard is a personal finance reporter for The Times.
Ron Lieber writes the Your Money column, which appears in The Times on Saturdays.
Tanzina Vega is a Web producer at The Times.
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