Too often those struggling with debt let it get out of control instead of admitting it is a problem. Home owners already burdened with consumer debt through credit cards and loans can face a losing battle once a change in the mortgage interest rate puts the payments beyond their reach. Caught in a debt trap they fight to stay afloat, afraid above all of losing their home. The stress can destroy relationships and there may appear no way out.
There is a very viable option open to those who are prepared to face the fact that they simply cannot cope with the debt, the mortgage payments and the cost of living. Rather than wait for the mortgage provider to come along and foreclose on the property homeowners have the chance of salvaging some of their finances by putting the property for sale.
Those who have any viable equity in the property have something far more to lose than just their home if foreclosure happens: they lose all the money they have paid towards the property since the day they moved in. By risking the equity they have done nothing more than rent their home from the bank. All the money they may have invested in the property by way of repairs and décor is lost. In addition they will find it very difficult to obtain a future mortgage with a foreclosure behind them, and their credit score would take a long time to recover.
Obviously the more equity one has in the property the more one stands to lose if the banks decide to foreclose. Consider if you strived hard to save the necessary down payment for your home and how you may never have the same chance again when deep in debt. By selling the property for the current market value you can only gain as will emerge with pride having overcome the situation.
The value of the equity can be used to pay off all your other debt in one swoop, leaving you totally debt free. Renting a home until you are back on your financial feet may make you feel that you have lost, but far better to have taken a pro active approach and emerged with something.
This is not the solution for everyone. In fact those who are trapped in negative equity don’t even have the option as they will emerge with an even bigger debt. Those that have explored other options such as refinancing though, and have admitted the overall debt is completely unmanageable, can benefit from selling before the problem deteriorates even further and take a financial breather before deciding what their next move is.