Three Options for Underwater Homeowners

What to do if you owe more than your house is worthAre you underwater in your mortgage? You’re not alone! In today’s economy, many homeowners owe more than their homes are worth and are unable to sell. A significant number of these households have fallen behind on their monthly mortgage payment due to extenuating circumstances beyond their control. So what do you do if you fall into this category? Below are the three most common options that homeowners with negative equity have to choose from.

Short Sale The Home

The term short sale is commonly heard in today’s society. In a short sale, the bank or lender agrees to discounting the amount owed on the loan, allowing the house to me marketed and sold at current market value.  Banks will often approve short sales if they feel it will result in a smaller loss than if they were to foreclose on the property.

Walk Away From The Home

Some homeowners choose to just walk away from their home and let the bank foreclosure on it. This might seem like the best option when you consider the home has no monetary value left in it. However what most homeowners who simple walk away and let the bank foreclose on the property don’t realize is that they are killing their opportunity to buy a new home for the next 7 years.  A foreclosure on a credit report will damper an individuals credit score for up to seven years, preventing them from purchasing another home until the foreclosure is dropped from the credit report.

In today’s credit driven society, a high credit score is crucial in order to be approved for loans and obtain the best interest rate.  Considering the credit effects of a foreclosure, simply walking away from a house should only be considered as a last resort option.

File For Bankruptcy

Filing for bankruptcy can be used as a method to consolidate debt and relieve some of a person’s financial strain. However bankruptcy does not prevent foreclosure although it may delay the bank from foreclosing. Delaying foreclosure may however be all a homeowner needs to do if they are able to settle other debts and regain control of their mortgage payments.

Find Out Which Option if Best for You

The Professionals at Homeowners Servicing Company can help you determine which option is best for you. Contact Us today for a free and confidential consultation.

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