Don't Walk Away from Your Home
If you're having mortgage payment difficulties, you may be tempted to "walk away" from your home, but abandoning your home isn't always your best option. Don't walk away from your home without looking into other options.
You may have heard in the news that many people who are faced with a mortgage that they can no longer manage, or who are facing foreclosure, or who owe more on their homes than they are worth, are "walking away" from their homes by dropping their keys in the mailbox abandoning their homes. While the idea may be tempting at times, walking away from your home won't always improve your situation, and may even make your situation worse.
Here's why walking away from your home isn't always your best bet to get out of a mortgage that's hard to manage, along with some alternatives.
Walking Away: Not Always Your Best Bet
Here are some reasons why walking away from your home isn't a good idea:
· Walking away from your home can hurt your credit. You still owe money on your mortgage, even if you walk away from your home. If you walk away from your home, you can end up in foreclosure, which can really hurt your credit and make it harder for you to borrow money in the future.
· Walking away from your home can cause you legal problems. Your lender may take legal action against you for the amount you owe on your mortgage, and charge you legal fees, too. Your local government may take legal action against you for failing to pay your property taxes, as well as for abandoning and neglecting your home.
· Walking away from your mortgage hurts others, too. Abandoning your home contributes to neighborhood blight, which lowers the value of other homes in your neighborhood.
Alternatives to Walking Away
Here are some alternatives to walking away from your mortgage, as well as some things to think about:
Before you do anything else, talk to your lender.
Your lender doesn't always want to go to foreclosure or have you abandon your home. Your lender may be willing to help you manage your mortgage, but only if you talk to your lender.
Look into refinancing your mortgage.
You may be able to refinance your mortgage to get a monthly payment or interest rate that's easier for you to manage. For more information about refinancing, visit our Mortgage Refinance page.
Consider selling your home with a short sale.
If you plan to sell your home, you may be able to make a short sale, which means that your lender accepts less than the full amount of what you owe on your mortgage. Ask your lender if a short sale is an option for you.
When all else fails, look into a deed in lieu of foreclosure.
If you still can't sell your home, your lender may accept a deed in lieu of foreclosure, which allows you to transfer ownership of your home to your lender instead of going to foreclosure.
Both short sales and deeds in lieu of foreclosure are last resorts, but they allow you to avoid foreclosure, which can hurt your credit score and cost you and your lender a lot of money and time.
You have other options than walking away from your home when you're having mortgage difficulties, but only if you take action right away, work with your lender, get the right advice, and act on it. To learn more, visit our Payment Difficulties page.
Related Articles:
Top 10 Tips to Avoid Foreclosure and Keep Your Home in Tough Times
What to Do If…You Owe More than Your Home Is Worth
Refinancing Q&A
These are general recommendations not applicable to all financial situations. Every financial situation is unique. Further, the suggestions and recommendations contained within the content provided are not an assurance of any future result. Be sure to discuss your specific financial circumstances with a legal or financial expert. Contact us for more information.
