Should I Use My Savings To Pay My Home Loan

Should I Use My Savings To Pay My Home Loan

As the current financial crisis spreads throughout the country and the world more and more people are losing their jobs, businesses and income. This means they can’t pay for their home loan and mortgage with their monthly income. The question is if they, I, you (it could be anyone of us) should pay my home loan with my savings or I should default on payments until I find a new job. This question is a loaded gun ready to misfire because there are a number of levels on which it can be answered and because it has strong moral connotations to take into account.

This question is not only hypothetical, as the crisis increases governments throughout the world have offered financial help to home loan borrowers that are struggling to pay for their monthly payments. These handouts and tax breaks are dependent on the liquid assets the home loan borrower has at his or her disposal. This brings interesting situations, if you were a sensible consumer, saved as much as you can and you have some cash in your bank you will not be eligible for financial aid condemned to use your hard earned savings until you are left with nothing (and begin to qualify for help) on the other hand if you always spent more than you earned and you are struggling because you never saved a dime you could spend then you qualify for all the help you want.

These scenarios are hard because they don’t seem fair, people who save should be helped not punished, after all it is thanks to savers that loans can be provided in the first place. However few of us would on the on the other hand agree with millionaires getting tax breaks on their mortgage by playing the system.

From the standpoint of investors, borrowers have a legal and moral obligation to the lender and should pay the monthly payments until they have money to do so. This argument is rather compelling, after all, few of us signed our mortgage contract with a gun to our head, we decided to take on the loan, it is our responsibility to honor our word.
On the other hand a man or women is accountable to more than to the Government or Financial Industry, we must also take into account our family. However if you decide to default on your payments your credit score will suffer drastically and you will not only have difficulties finding another loan but also risk losing your home.

However if the choice is to default on your payments this month or spend all your cash on this month’s payment leaving you with nothing then you might consider keeping the cash. Having said that, that is an illegal procedure that we should avoid at all costs.
It is also illegal to lie about your savings and income when filling in a home loan aid questionnaire, which is one of the reasons we should be so careful about getting involved in loans.