Keep the House, Especially When You Can Afford It

Q The value of our family's home, bought at the peak of the housing market two years ago, has declined so much that we've lost all our equity, and it's now worth less than the mortgage. But the fixed-rate monthly payment hasn't changed, and we can comfortably afford it.

My husband says it would be smart to default on the loan, give the lender our house and buy a similar house for much less. "Everyone's doing it," he says. I think this is unethical. What do you think?

AI agree with you. Your mortgage agreement is a binding contract that you and your husband should honor, especially because you were not tricked by an unscrupulous mortgage broker (as many subprime borrowers were) and you can still afford your monthly payments. Surrendering a home in foreclosure should be the last resort for truly desperate homeowners.

Consider two other things: First, you won't easily get another mortgage if you walk out on this one. Second, the value of your home will eventually resume its ascent.