In today’s tough economic times, many people have found themselves in the unenviable position of being upside down on their home loans. They owe more than their house is worth, and this can cause many problems for them. They may feel like they are continuously paying without any hope of coming out ahead. As a result, many people have chosen to leave their homes, allowing them to be foreclosed on but is this always the best option? There are some cases where it is, and other cases where it is not. The best options for you really boil down to what your current income and other expenses are. Even if you are going to leave, attempting a short sale may be a little bit easier on your credit and your future than a foreclosure.
* When you should stay
If your income is plenty to continue to pay your mortgage, you would be wise to consider staying in your home. The real estate market may have taken a severe turn for the worse in recent years, but this does not mean that it will never go back up. If you like the neighborhood that you are in, and you have enough income to continue making your payments, you really need to consider staying where you are. Real estate is starting to go back up, although the growth is very slow right now, and you will recover your losses if you stay there long enough.
*When you should do a short sale
A short sale is when you sell a property for less than what you owe. You have to be working with your bank/mortgage company to do this properly, because they will have to approve the sale. It still doesn’t look great on your credit, but it is better than a foreclosure. A good time to consider this option would be if you are making your payments, but may not be able to continue making them for long. Talk to your bank, and see if you can work out some arrangements with them to make sure that you are selling your home for a price that they can accept. This should be something that you try to do before foreclosure proceedings are started. Divorce or the loss of a job may be something that would cause you to want to go this route.
*When you should just leave
There are times when it is wise to just leave the property behind. This is not something that you really want to take lightly, as it will ruin your credit for years to come, and buying a house again anywhere in the near future may be an impossibility. When you are unable to make your payments after you have tried everything else, this may be all that is left. If you are falling behind despite all efforts to the contrary, and you have tried a short sale to no avail, this is the time that you need to consider just leaving the property behind. If you are going to take this step, filing bankruptcy immediately afterward may help you to rebuild your credit faster, so do keep that in mind.
These are your options when you are down on your luck and upside down on your mortgage. Allowing your home to go into foreclosure is only good as a last resort, but sometimes you may need that fresh start. After all, even the richest people have had to accept defeat from time to time.