Should Foreclosure Victims Walk Away from the Real Estate?

There are thousands of homeowners who are in foreclosure on both investment properties and primary residences, and many are simply packing up and walking away. This is due to a number of factors like increasing mortgage payments. If you have determined that your home is simply too much to afford, walking away has become a popular decision for those who are finding it impossible to make good on the loans they borrowed.

Before doing so however, it is important to realize that you do have some choices when it comes to moving on to a property that is more affordable and that you can buy at a discount in the market today. The first step is to contact your lender and see what kind of assistance they can offer. They may be willing to refinance your loan in a way that can get you caught up in a short period of time, at the same time put you on track to rebuild your credit score if it has fallen due to missed mortgage payments. If you have exhausted all options through your current lender and they are unwilling to offer any kind of alternative that makes sense for you, you should consider selling the property.

Because of the glut of unsold homes in most regions across the country, it is likely that the property will need to be priced aggressively and competitively compared to similar homes in the market. Consult with a trustworthy realtor to determine the best asking price for the home to ensure a low market time and a clean sale. By selling the home you hopefully can pay off your lender. If it is worth less on the open market than what is owed as debt, your lender may be willing to cooperate with a short sale and work with you and your buyer to come to an agreement on sale price. A short sale is simply when the bank is in a position to accept less for the property than what is owed to them on the primary lien. More and more banks are becoming more flexible when it comes to what they are willing to take.

If you find that you are unable to sell the property or receive any helpful terms from your current bank, and your credit is too screwed up to modify the loan, walking away from a failed investment and cutting your losses is not the end of the world. Many purchasers have lived in their homes for years, and there is a sentimental attachment to the property after a while.

But if the home is too much money on a monthly and annual basis and you simply cannot afford to stay in it, then there is no shame in making the decision to walk away before you dig a deeper hole and possibly one that you cannot get out of. You may be able to get back on track sooner the faster you cut loose of the bad investment and start to stabilize your financial situation.

Nick publishes articles on the ForeclosureFish website to provide foreclosure help and advice to borrowers in need of assistance. The site describes numerous methods to save a home, including deed in lieu of foreclosure, filing bankruptcy, short sales, defending foreclosure in court, and others. Visit the site for an e-book explaining the basics of foreclosure and how to stop the process: www.foreclosurefish.com/

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