Many homeowners in all parts of the U.S. are continuing to see the value of their homes drop dramatically. Very few places have escaped this drop. Some people have been able to keep making their payments and stay in their homes. But not everybody has been so lucky. The number of homeowners who are dealing with foreclosure is still increasing.
If you are someone who has lived in and made payments on a home for a number of years, you have probably built up some equity. And so in that case you will no doubt do whatever it takes to keep up with those payments. Despite the fact that your home has decreased in value you have enough invested that you’re hoping that the housing market will rebound at some point in the near future.
Then there are those who purchased a home in more recent years with practically no money down and with very low interest rates for the first few years. But now the low interest is over and mortgage payments are huge. If you are in this situation, foreclosure may be almost a foregone conclusion.
But how about those homeowners who are still working and can still afford to make their payments? There is a growing trend among more than a few of these homeowners to just walk away. Basically they stop making their payments and let their homes go into foreclosure.
Despite the fact that they make more than enough money to keep paying on their mortgages, they aren’t getting ahead, even if they decide to pour in huge chunks of cash. What’s happened is that the value of their homes has plummeted to the extent that they feel it’s not worth it to keep paying and paying.
Everything is very different when you are dealing with foreclosure that you decide to allow to happen. So before you let it happen, you need to seriously think about the long range consequences of your actions. The same rules won’t apply to you. What can you expect if you allow this kind of foreclosure to happen?
Government officials have made it very clear that the same “forgiveness” clause that can be applied to people who legitimately lose their home to foreclosure, will not apply to those who choose the foreclosure process even if they can afford to pay. We don’t know what steps, if any, may be taken to prevent these walk away by choice foreclosures
A real consequence is that your credit rating will suffer, probably a lot. There may even be more severe or longer penalties. There is a concern that if you walk away once what’s to prevent you from doing it again at another time.
Having a note on your credit report can be damaging when you apply for financing for other major purchases. You may well be subject to higher interest rates on purchases as well as on credit cards, if you can even get them.
Will banks and mortgage companies be willing to finance mortgages for those who choose to default? And will this choice have a negative impact for years in the future?
No one knows exactly what’s going to happen. But before you walk away, seriously consider what dealing with foreclosure in this way could mean for you, now and in the future.
If you and your family are facing foreclosure, you need help. Get free foreclosure information and find out how to stop a foreclosure.