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Ask Curbed: At What Point Do You Cut Your Losses?

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Ah, a question from someone who is trying to help out the person they are dating. Here it is: "I'm a renter, but I'm dating someone who bought a place last year. If you owe more on a mortgage than your home is now valued and your mortgage is not going to reset for another four years, is it a good idea to sit tight and ride out the slump and hope that values increase again? Is it worth trying to save the mortgage and get out from under? At what point does it make sense to just walk away?" Obviously, some more variables about this situation need to be known. In light of that, we lobbed this question at a good friend who has been through numerous real estate cycles. His opinion: "If you can wait it out, wait it out. But if you don't want to sacrifice your lifestyle or you have to pay for your kids' education, cut your losses. LA is only going to get more valuable in my opinion, because it's a finite market. This isn't Oklahoma. It may take a couple of years, but I always think it's better to wait. But then again, I am happy to drive a beat-up car and make sacrifices lifestyle-wise; you may not be willing to do that."
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