If you’re like 75% of homeowners in California, you’d rather stick it out than default on your mortgage. When we start to get “underwater” with our mortgage, or even fear that it’s a possibility, the fear and guilt more than logic and rationality affect our future decisions.
As the economy begins it’s slow ascent and house prices continue to fall, most homeowners would rather hold on to their homes than face the stigma associated with a strategic foreclosure. Rumors of Short Sale failure, long wait times and the affect on our credit keep us from making a decision that will save us from the devastation of a foreclosure.
But you may be surprised to know that the number of homeowners deciding to sell their homes even though they can afford to pay their mortgage is growing. Plunging property values are forcing more homeowners to fall behind on payments, and the social stigma attached to foreclosure is steadily eroding as delinquencies start to become commonplace.
Should You Try a Strategic Foreclosure?
If you can still afford your mortgage, but your property value is falling too quickly, you can try a strategic foreclosure. Defaulting should be your last option. If you can pay off a portion of your mortgage and walk away without a foreclosure on your credit, you’ll be much better off in the future.
When you consider a strategic foreclosure before you fall behind in mortgage payments and right after you’ve unsuccessfully applied for a loan modification, you have a longer period of time to prepare your home for sale. If you fear that your situation will worsen over time and you need a foreclosure alternative, and you would like to retain your high credit score, a Short Sale may help you recover faster.
Walking away from your mortgage or forcing the bank to foreclose will have a definite negative effect on your credit score.
Forget About Guilt. Think of Your Future.
If you forget about the guilt and shame associated with Short Sales and make your decision based on purely financial reasons by considering the current rates of appreciation in your local market and then consider how long it will take to break even on your investment and regain your equity.
The cost of renting for a couple of years, or even the opportunities that exist for homebuyers in the current housing market, if you or a family member are somehow able to immediately purchase another home, could help you rebuild your credit score and get back on your feet more quickly.
Your mortgage is not a moral obligation, it’s a legal document.
How will a Short Sale it affect your credit?
This is the big question. And you can find the answer here.
If you have more questions about Short Sales, contact me today.
Sincerely,
Mark Shandrow
Real Estate Broker
office 562-364-9505 ext 100
mark@shandrowgroup.com
Shandrow Group
3970 Atlantic Ave., 210
Long Beach, CAÂ 90807
follow my story at http://markshandrow.com
