Should you walk away form your mortgage?

First you should determine if you have negative equity in your home. Negative equity means that you owe more on your home than it's worth. Sites like zillow.com can give you estimates on how much your home is worth. Zillow is not always extremely accurate but it does show recent sales so that you can compare your home to other homes for sale or sold.

You should next determine if you can rent a home for less then your current mortgage payment. You should use some sort of calculator to help you determine if renting is less expensive then owning a home. There are sites like payorgo.com that gives you a template to help you calculate the costs.

Third you have to determine if the housing market starts to rebound how long would it take to recover your negative equity. Some estimates show that your home' s price will be expected to increase at an annual rate of 3% over the next 10 years. That means your home' s value may not start to increase until 2015 or 2016. In some depressed markets it may not increase until 2020 or later.

With little or no help in sight for the underwater homeowner, more and more people are now walking from their mortgages.  Financially this may be the best decision for you and your family.   In Florida for example there are communities where homes that had once sold for $280,000 are now going for $180,000 in short sales.   This will in turn bring down the value of the surrounding homes when comparing values.  It may be almost impossible to recover the value of your home from such a drop. 

The following may apply if considering walking away:

• Walking away can have legal repercussions
• If you plan on staying in your home for a long time then you may recover
• There are certain areas of the country that have been hit harder