If you are having difficulty making your mortgage payments, have little or no equity in your home, and your loan amount is more than the value of your home, it seems very tempting to just walk away and let the bank deal with it. There is also a rapidly emerging group of advisers who are suggesting that this is a good idea and promising to help you for a fee. (Related: How much is my home worth?)
Is this a good idea?
- Since everyone’s situation is unique, you must consult with your own attorney and accountant to get professional advice that makes sense for you.
- As a general rule, though, abandoning your home like this can prove to be a disaster for your future. Indeed, you may not have to pay anything to the bank and might even save money by not paying your mortgage while you live in the house for a few months, but remember that every thing that you do is going to be part of your credit history. In case you did not know, a credit report is checked every time you want to get a credit card or apply for a loan or get hired for a new job or want to rent a home. No person in his right mind would want to do business with you because you will be deemed as someone who is not reliable, is not likely to honor a legal agreement, and is absolutely unethical.
- While it may be hard to make the payment, there are ways around it. Call your bank and try to negotiate. If you have space, rent out a part of your home. Get a second job or if a spouse is not working ask him or her to find work. (Related: How to delay foreclosure and how to avoid foreclosure).