Mr. M I PresumeWe’ll call him Mr. M. Mr. M lives in Florence, AZ in a two year old house of approximately 3300 sf, on about a quarter of an acre. Big and big. But he is not happy. It seems that homes in his subdivision that are currently being sold by the same developer have dropped in price by well over $100,000. Therefore Mr. M owes more on his house than it is worth.
Mr. M has an idea. He is going to buy a second home in the same area, and walk away from the first. His “credit rating” (read Holy Grail) my suffer, but who cares? He will have a house to live in which will cost him much much less than the one he is living in. And what do you need a credit rating for except to buy a house? Anything else that you are using a credit rating for (buying stuff with credit cards, or paying too much for new car payments) would be better done without credit anyway. So walking away from his house might save him $100,000 or more, and if he can’t get more credit cards and car loans, he’ll probably save another $150,000 in the next 10 years by not being able to buy junk he doesn’t need anyway.
Results may vary, but it might be possible to have your cake and eat it too.
1 comment:
When you're right, you're right! Mr. M needs to walk away. However, he may even get a better value on the new home if he waits for the summer. The Fed will probably drop the rate again and summer's in Arizona are very hard time to sell, especially for new construction. Which means, MR. M will be able to rape a new home builder on the sales price. Speaking of which, I'm quite certain Mr M carries a bigger gun in his hand. If you knew him, you could tell by the rather large bulge in his pants.
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