Money Talks, So Should You

Ask Jane: Should I keep paying on my underwater mortgage?

Jane Bryant Quinn
by Jane Bryant Quinn, Dimespring Contributor  (@janebryantquinn)

Most people do. Almost 40 percent of homeowners are underwater, according to the latest Zillow Negative Equity Report. Yet 90.8 percent of them are current on their mortgages and continue to make payments. The rest — willingly or unwillingly — have decided to give up.

You’re underwater if your house is worth less that the mortgage against it. The younger you are, the more likely it is that you’re in this fix. Almost half of the homeowners under 40 owe the bank more than they could get if they tried to sell.

READ: Crisis Button — I'm about to miss a mortgage payment, what do I do?

Why would you decide to keep on paying? Three reasons:

  • You like your house and expect to stay there for many years. During that time, the value of the property might recover, especially if you bought it well after the 2006-2007 bubble peak. If it doesn’t, that’s life. You’re still in the place you want to live.
  • You can’t afford to sell. The buyers would pay less than the amount you owe and you don’t have the cash to pay the bank the difference. For now, you’re stuck.
  • You can afford the payments and don’t want a default on your record. Every check you send to the bank grates on your nerves, but you want to maintain a good credit score and access to low-cost credit in the future.

READ: What if you can't sell your home?

When should you quit making payments? When you can’t afford them due to income loss and when you are draining your savings to try to keep the house. That’s not fair to your family and your future. You need to save enough money to start over, and abandoning an unaffordable mortgage is a good place to start.


Jane Bryant Quinn is a nationally known commentator on personal finance, with books and columns read and trusted by millions. In her long career, she has established herself as America’s most reliable voice for people trying to manage their money well. Read more of Jane's articles here