Foreclosure Volunteers: Is Strategic Default for You?
Recent studies show 34% or more of foreclosures are now ‘strategic defaults’ so is it time you got on the bus?
For those unfamiliar with the terminology ‘strategic default’ is basically opting to stop making mortgage payments and essentially volunteering to go into foreclosure.
Some are just walking away, some milking all the free time in their properties they can before being forced to move and some are attempting to force lenders into granting loan modifications or short sales.
Being underwater and owing the bank far more than your home is worth certainly doesn’t feel great and by the ‘math’ it can appear to make a lot of sense to buy something else at today’s lower prices and just walk away versus overpaying on the current value of the home or waiting another decade for equity to bounce back.
However, it is important to recognize that you haven’t really lost anything until you have sold. Plus many homeowners fail to really do the complete math and truly weigh the costs of a foreclosure over the rest of their lifetimes. It means paying more for everything as well as potentially holding individuals back from promotions or even getting a job.
It is also critical to point out that just halting mortgage payments and waiting for the sheriff to evict is not a strategy, that’s just giving up.
Even if you are underwater on your home loan you could sell your home as a short sale and potentially receive tens of thousands of dollars to move or have your lender reduce your principal so that you have room to sell or more reason to stay put.
Whatever you do, don’t just give in and let them have home for free!