Comment by naasking
5 days ago
I think you're neglecting to account for a big risk. If the house retains or increases in value, the bank can just take the house to recoup what you owe them of you can no longer pay the mortgage due to ill health, accidents, etc. What do you think happens if the houses value drops a lot and you can no longer pay what you owe? You don't just lose the house, you're in a much, much deeper hole. How property values go substantially changes the risk calculus of owning a home with a mortgage.
> You don't just lose the house, you're in a much, much deeper hole.
Oof, I was about to question if this is correct or not, but it turns out that this is indeed true in most US states: if you default on your mortgage, and the bank can't resell your house for at least as much principal as you have left to pay, you still owe the difference, and they can get a court to garnish your wages, put a lien on any future home you may buy, get your accounts frozen.
Didn't realize this was a thing... I live in a non-recourse state (California) where the bank only gets the property on default and can't pursue you further.