Many borrowers are, by nature, meticulous about honoring contracts and paying off their debts. However, when they’re stuck with a property that is worth far less than the mortgage amount, the property becomes a drag on family cash flow, a pecuniary black hole and a noose around their neck. You may call it an exorbitant rent. If there is a huge difference between the current house market value and the mortgage balance, you are essentially throwing your money away into a garbage can. If the monthly mortgage payment is far more expensive than the rent on a similar house, then you have a financial burden of overpayment. However, if the mortgage payment is equal or at least slightly higher than the rental, then it is better to hanging on to your mortgage, but that might depend on the house condition and other factors such as additional ownership and maintenance costs.

House ownership requires replacement/maintenance costs, higher insurance (more than renter’s insurance), and payment for taxes. If you do a careful household cash flow/budget analyses with your spouse, you may find an astounding cost differential between paying an overvalued mortgage and rent for a similar home.

It is understandable that it would be difficult to give up this cash-eating arrangement. Although you can spot this financial detriment, stopping your mortgage payment may cause unhappiness or psychological turmoil as owning a house, no matter how expensive it is, is a central issue in many families. Even so, you do need to face the consequences of sustaining your sinking financial ship, like finding a second job or lower your monthly expenses.

Many mortgages are currently underwater, while others are delinquent; one of the reasons why people haven’t walked away is an overblown fear of harming the credit score. Probably, householders also labor under a hope that their house value will be one day reach the mortgage amount, although it may take decades.

FHA Secure loans are often used by homeowners with underwater mortgage to improve their financial situation. These loans are applicable as long as you are current of your mortgage payments and have enough income to pay the new monthly mortgage payment.