Then the real estate market crashed and left them owing hundreds of thousands of dollars more than their home was worth. For years everyone had told them that couldn't happen. Many of those people also lost their job for the first time in their life. It's interesting because today we are seeing as many short sales in the upper income brackets as the lower income brackets.
I'm not judgmental of someone who is short selling their home. I deal with people from all walks of life. Some are high income. Others bought less expensive homes. Either way, it doesn't matter to me. I see a short sale as a smart financial decision. I'll be congratulating you instead of judging you.. Who wants to be burdened with a huge debt for the rest of your life? Not me. And neither should you.
Here is why a short sale is a smart financial decision. Let's say that you are upside down on a house by $100,000. (If you upside down by an amount lower than $100,000, then don't laugh. Many people are upside down by that amount and more.) Repaying $100,000 over 30 years, will cost you $215,000. That is the $100,000 originally owed, along with $115,000 in interest payments. The number varies according to your interest rate.
What if instead of repaying that money, you put that money towards retirement? Let's say you took that monthly payment and invested it as an 8 percent interest rate. At the end of 30 years, you would have $804.545.01 saved up. Wouldn't that be helpful in retirement? That is one small reason I recommend short sales to my customers. You can get the upside down debt forgiven in a short sale.