Comment on A conundrum
null_dot@lemmy.dbzer0.com 1 day agoYou’re overthinking it.
The loan history is not relevant. The $50k you paid is gone. Sunk costs fallacy and all that.
A mortgage isn’t a complicated shared equity situation.
You owe the bank $650k and if you don’t pay they will take the house worth $600k.
Obviously if you default there will be legal problems and you’re still on the hook for the last $50k and so on, but there’s no incentive to keep paying. Like if you declare bankruptcy then you don’t have to pay the $50k and you can start saving for a deposit on your next house for when the exclusion period expires.
Lumisal@lemmy.world 1 day ago
Declaring bankruptcy would only be beneficial if the housing market fully crashed and it went down in price significantly and you don’t think it’ll be going back up within the next few years.
Not to mention it’ll be a lot harder to get a house in the future if you did that, and you’d get all the other downsides of bankruptcy as well.
Not to mention, this is all under a stay that assumes you’d actually be able to buy a house without a significant deposit.
Under the current system, it’d be an even bigger setback because if the house did lose a lot of value, now you’re also out a huge amount of money, still have to pay the full loan anyway, and it might take years to save up enough again to get a future house.
Basically, the banks are operating more as insurance gamblers now than they are lenders, because no matter what they win big. Even though banks should primarily work as centralized financial institutions rather than businesses, because otherwise they cause huge ramifications for the economy.