Consequences of Walking Away from Your Mortgage

Many people are walking away from their homes rather than paying their mortgage. While this may seem like a good idea, there are some huge consequences for doing it.

More and more homeowners are packing up their belongings, mailing their house keys to their mortgage lender and walking away from their home mortgages. Many of them simply think this is the best thing they can do financially, psychologically and emotionally. However, they are caught up in the moment and they are not thinking straight. Walking away from your mortgage can have many consequences that you do not even think about. Of course, it may be the only option for some homeowners. But if there are other options, consider the consequences of choosing to walk away.

Credit Damage
If you walk away from your mortgage without paying it off, it is almost certain to have a huge impact on your credit. This impact will be on your credit history for several years. You probably won’t be able to get another mortgage loan for as long as this incident shows on your credit so you will be forced to rent or consider other options.

Owing Money Anyways
When you walk away from your mortgage, you can’t just wave goodbye to your financial obligation. You may try, but the lender is going to pursue you for the money you owe. Even if the lender sells the home, it will likely be sold for less than what you owe and you will still be responsible for the difference. In addition to that, there will be fees, penalties and other charges to make up for the legal expenses, late fees and anything else that the bank had to pay in order to sell the home.

No Help
Once you walk away from your mortgage, you no longer qualify for financial assistance to pay your mortgage payments. If you are stay in your home, however, the government is providing a number of programs to help you make your payments. Whether it is a loan modification or some other program, homeowners who decide to stick it out will receive advice, counseling and even money just to stay in their homes. Banks and lenders will even work with you if you talk to them at the first sign of financial trouble. If you simply cannot afford to pay your mortgage any longer, you may be able to work something out where you turn the property over to the bank without getting the dreaded “foreclosure” stamp on your credit report.

Before you walk away from your mortgage and your home, be sure you have considered every other available option first. Have you talked with your mortgage company to see if they will work with you? Have you contacted your state and local government to find ways to help you pay your mortgage for a short time until your financial situation improves? Have you asked friends and family members for short-term loans to help you stay in your home? Walking away has such negative long-term effects and it should not be a decision you make lightly.

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