What it means to walk away when facing foreclosure
Understand your options if facing foreclosure and getting current on your payments is either unlikely or your property has dropped in value. Walking away from your mortgage could be a strategy so let’s take a closer look.
Have you received a default notice from your mortgage lender? If so, you typically have between 30 days to 120 days to stop foreclosure proceedings. This is an approximate time frame depending on the state you live in and your exact circumstances.
Why would it make sense for you to walk away?
Look at your home as a business transaction and separate your emotions from it.
It’s tough to do, I know. Believe me, I’ve been handling international and local real estate transactions for 30 years and I know what’s it like to have family and personal emotions tied up in a property. But just try this.
Your Present Equity Position
Point 1—what is your home’s current value and what is the near future projection for the value?
If you’re tapped out in equity then doing the hard work of bringing your payments current may be worth the hard work if:
· Your home is most likely to increase in value
· Area rentals are the same cost as your mortgage
· You can endure the stress and have a plan for coming current
· You don’t have to spend much on home maintenance costs
If you purchased your home in recent years during a hot housing market, like 2021, and the value is dropping then having that value increase where you’re going to have equity isn’t likely for the next several years.
Housing values are local, and I help homeowners facing foreclosure across the nation so I can easily research home prices using my professional network.
Home maintenance impacts the overall value, too, so if you have work needing to be done like re-piping or windows needing replaced then you have to ask if that’s worth the financial stress.
Summary: the less equity you have, the more your home value has stagnated or dropped, and the more maintenance costs you’ll pay then the less financially feasible it is to try and bring your payments current.
Real estate prices typically rise anywhere from 3% a year to 5% per year, as noted in Investopedia.
If you really can’t get out from under the bills then I’ll talk to you about getting out from under the burden of the foreclosure process.
Your Housing Options
Point 2—look at your housing options that are less expensive.
I’m passionate that families of any life stage can find affordable housing options that are quality alternatives to an expensive single-family home.
Townhome or nice apartment rentals could be a workable solution for the short-term if you’re trying to boost your income and flatten expenses.
As a disclosure, I also buy and sell land and I’ve seen families make this option work for them.
I just want you to know you’re not out of options so don’t panic.
Your Steps to Take in Pre-Foreclosure
The three most common methods of walking away from your mortgage are a short sale, a voluntary foreclosure, and involuntary foreclosure.
The first two options require you to communicate with your lender and that’s something I can help you do. I have plenty of experience with negotiations and can offer you relief in this area since communicating with a lender is necessary but also stressful.
A short sale is where we’re able to sell the house for less than the current value if necessary.
You can also turn the property over to the lender voluntarily so we can avoid the third stage of involuntary foreclosure.
I’m Here to Help
Contact me for a no-obligation consultation. Trust is important so we can take the time to learn a little about each other and you’ll see if I might be of help.
Regardless of your circumstances, real estate is valuable and I want you to feel in control of your financial future.
Need more input?
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