More Gibsonia Pennsylvania Home Owners Choosing to Stop Paying their Mortgages

 Gibsonia Pennsylvania homeowners live in an area of the country where a large number of strategic defaults are occurring. The latest trend that is thought to be a result of the huge numbers of homeowners who are underwater on home loans is strategic default. This is when borrowers who own homes that are not worth the amount of the loan that is being paid decide to stop paying their mortgage. They continue to pay other debts, such as auto loans and credit cards. Gibsonia Pennsylvania homeowners have joined other homeowners in many parts of the U.S. that have decided the wait for the equity to return in their home is not worth it.

The trend is believed to be contagious. Gibsonia Pennsylvania homeowners watch others default and they begin to see this option as worthwhile. They look at the prospect of waiting for years for the home to provide a positive equity and strategic default becomes even more of an attractive option. CoreLogic, a consumer, financial and property information provider, believes the high number of foreclosures today plays a large part in the decision as well. In the past, it was considered socially unacceptable to walk away from a home loan, however today so many are doing so that it is no longer considered dishonorable to do so.

The likelihood of strategic default is even more prevalent in areas where the home prices are weak. This could lead to the default becoming more of a normal practice than an exception. If this happens, the outlook for Gibsonia Pennsylvania prospective homebuyers as well as others across the country could be hugely affected. In the future, lenders would feel the need to add this element into the risks associated with home loans and the result would likely be higher interest rates and larger down payments.

A recovery in home prices for those in Gibsonia Pennsylvania and other areas would help at this point. However, if homeowners believe they are facing another ten years before the positive equity returns in their home, they are more likely to strategically default on the home loan. CoreLogic estimates place the time limit for borrowers at approximately five to seven years before a return on the equity in their homes will be regained.