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Avoid Foreclosure at all Costs
Ask anybody who has gone through a foreclosure and he/she will tell you outright that it's something you never want to go through. Well, a foreclosure is nerve-wracking, heart-breaking, and time-consuming. In addition to the social stigma that's still associated with foreclosure, the foreclosure will appear in your credit report and will affect your job, business, or loan options for many years to come. For instance, a prospective employer might think that you're unable to manage your own money, so you'll be unable to competently handle someone else's.
Reasons to Walk Away from Your Mortgage
Here are some reasons why walking away from your mortgage could be the only option.
You're underwater - This is essentially when the amount owed on the mortgage is higher than the current value of your home. Financially speaking, it would make sense to walk away from the mortgage.
Free yourself from the Debt Burden - Having a mortgage to pay is a serious debt burden. You can consider walking away from your mortgage as a way of freeing yourself from this debt burden.
You want Less Responsibility - Owning a home can be both a financial and physical burden. If you've decided to rent a home and avoid the liability that comes with being a homeowner, you can simply walk away from your mortgage.
Ways to Walk Away from Your Mortgage
No matter your reason for walking away from your mortgage, here are ways to walk away from your mortgage.
A Short Sale
A short sale is essentially when you're forced to sell your home at a discount and below the value of the mortgage. You'll, of course, have to obtain a letter of permission from your lender and submit a "hardship letter". This is to explain in detail and with evidence the main reasons why you can no longer pay the mortgage. You should accompany this letter with medical or financial records to support your claims.
You'll go through the normal process of selling a house: hiring a real estate agent, getting the house to be listed, and waiting for offers. The only caveat is that the lender must agree to the short sale and will have to approve any offer before the sale can be completed.
Unfortunately, a short sale may not be the best solution. This is because your credit score will still be affected, though not as bad as a foreclosure or bankruptcy.
Deed In Lieu of Foreclosure
This is fundamentally a legally binding agreement that transfers ownership from you (the homeowner) to the lender. The idea here is that the lender will release you from the burden of the mortgage and will sell the home to recoup their losses.
This option is a lot better than a foreclosure for both you and the lender because it saves time and you'll avoid the bureaucracies that come with foreclosures. In most cases, you'll not be required to pay the difference if the sale doesn't cover the entire mortgage. You should, however, keep in mind that you may still be on the hook in some states. As such, it's advisable to seek the services of a real estate attorney and get all the details and caveats regarding your specific case.
Hire a Real Estate to Sell Your House
You can consider hiring a real estate agent to sell your house and use the money to cover the mortgage. While you'll have to wait for the process, which can take months, this is a good option if you can do it before the foreclosure.
Look for Government Assistance
If you're able to get government assistance through programs such as Veterans Affairs, FDH Home Affordable Modification, or the U.S. Department of Agriculture, this can be a viable way of walking away from your mortgage. This will, however, depend on the terms of your mortgage and whether or not such a clause was included. Such programs can help you move to a more affordable home and walk from your mortgage while avoiding foreclosure.
Sell Your Home Directly to a Real Estate Investor
You're probably wondering why we are not talking about mortgage modification or refinancing your home. Well, the main idea is to walk away from your mortgage and not modifying your loan. For this reason, the best way to walk away from a mortgage is to look for a serious real estate investor looking to buy properties.
We've used the word "serious" because not all real estate investors have your best interest at heart. It's easy to get scammed, so it's of great importance to work with an accredited real estate investor. When done right, this can be a great way to get away from your mortgage.
Are You in Need of Help?
There are times in life when things can go very wrong that the only solution is to wave the white flag, throw in the towel, and walk away from your mortgage. When you're drowning in your mortgage and facing the prospects of a foreclosure, walking away from your mortgage might be the best option. This situation requires serious thoughts and should never be done overnight.
Hopefully, you'll never find yourself in a scenario where you have to terminate your mortgage. But if you ever find yourself with the prospects of the much-dreaded foreclosure, do not hesitate to contact us. We'll not only help you through the entire process but we'll also make sure that you never have to deal with the stresses and hassles that come with foreclosures.
Contact us today, fill out the form and we'll be more than happy to help you out.
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