Dealing With Foreclosure When You Choose To Walk Away

Many homeowners throughout the U.S

Many homeowners throughout the U.S. are seeing the value of their homes plummet. Few places have managed to escape this drop. Some people have been able to continue to make their payments and remain in their homes. However, not everybody has been so lucky. The number of homeowners dealing with foreclosure is on the rise.

If you are someone who has lived in and been making payments on your home for a number of years, you will probably have built up a substantial amount of equity. If that's the case you will no doubt want to do whatever it takes to keep making those payments. Even though your home has decreased in value you have so much invested that you are hoping the housing market will eventually rebound.

Then there are those people who purchased homes over the past few years, with little to no down payment, because they were promised very low interest rates for the first year or two. Once the interest rates increased so too did payments, making foreclosure almost certain.

But what about those who are still working and can afford to make their payments? There is a growing trend among some of these homeowners to just walk away, stop making payments and let their homes go into foreclosure.

Even though they make enough money to continue paying on their mortgages, they aren't getting ahead, even if they pour in huge chunks of cash. The fact is that the value of their homes has plummeted so much they feel it's just not worth it to keep paying and paying.

But when you are dealing with foreclosure that you have chosen to let happen, everything is different. And before you allow it to happen, you need to seriously consider the long range consequences. The same rules don't apply. So what can you expect if you let this happen?

Government officials have warned that the "forgiveness" clause that is being applied to homeowners who are legitimately losing their homes to foreclosure will not be available to those homeowners who choose foreclosure even though they have the means to pay. The steps they are prepared to take, if any, to put a stop to this type of walk away foreclosures have not yet been decided upon.

There is no doubt that your credit rating will be negatively affected. It's quite possible that the penalties may last longer or be more severe. Financial institutions are especially concerned because of the fact that if you've chosen to walk away from financial obligations once, what's to stop you from doing it again at some future time.

Having a note to this effect on your credit report may be damaging when you try to get financing for other major purchases. You might be subject to higher interest rates on these purchases as well as on credit cards, if you can even get them.

Will mortgage companies or banks be willing to finance new mortgages for people who have defaulted by choice? Or will your choice today negatively affect you for years to come?

There is no definitive answer as to what exactly will happen. But before making the decision to walk away, carefully consider what dealing with foreclosure under these circumstances may mean for you, not just now but in the future.

by: Carolyn Langlois..

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