When Is It Time to Walk Away From A Mortgage?

The San Francisco Chronicle recently posted a story on their website that is a true sign of the times; “Your Mortgage: When It’s Time to Walk Away.” This isn’t the first time I’ve come across articles covering this topic and it seems to be a question which is more and more feasible for American property owners. At the start of 2010 it is estimated that 25% of homeowners are “underwater” meaning they owe more on their mortgage than they home is worth. Of those who are underwater, many have a value deficit of 25% or more. Do in part to these unique circumstances, for the first time in history homeowners are just walking away from their homes, whether it is a primary residence or rental property.

When a homeowner can rent a similar property for less than their monthly mortgage payment, many experts suggest doing just that. When equity is at zero (or even negative) and the monthly payment is a struggle with no benefit to hanging on any longer, why continue the struggle? Yes, the home is where the heart is, but let’s face it, it’s also an investment and when they investment is sinking and dragging down not only your finances but your mental health and stress level, cutting the ties and getting out can be the best decision for any homeowner.

There are basically three ways to walk away from a mortgage that is suffocating:
Short Sale: A short sale is a proactive approach whereby the homeowner (or a short sale expert) approaches the mortgage company lender and gets them to agree to sell the home for a reduced amount, which is lower than the actual amount the homeowner owes on the home and forgives the remaining amount. A short sale expert can make this process quick, easy and relatively painless. If you have a home you are interested in short selling, contact the expert in the business at www.JTBuysHousesOH.com or call Tom at (614) 453-5963 or JTBuysHousesOH@gmail.com.

Voluntary Foreclosure: A voluntary foreclosure is whereby the homeowner turns the house over the lender, usually via a Deed in Lieu of Foreclosure.

Involuntary Foreclosure: An involuntary foreclosure is whereby the lender uses the legal system to take back control of the property and may use the police department to remove the occupants if necessary.

Any of the three options will put a ding in one’s credit score as will late or missed payments of any debt. If deciding to walk away from a mortgage it is wise to locate a new residence whether it be a smaller, less expensive home to purchase or a rental property/unit, make any large purchases, such as a vehicle prior to, so as it set up a new living situation before one’s credit report takes a hit.

If your home is being foreclosed on, you can no longer make house payments or you simply want to discuss your options, we highly suggest www.JTBuysHousesOH.com where their Mortgage Relief Specialist will talk you through your options.