A strategic foreclosure might be something you are interested in if you currently owe more on your home than the house is worth. If this is something that you are considering, our Florida foreclosure defense attorneys would be happy to meet with you for a free consultation. Keep reading to find out if walking away from your mortgage is right for you.
What is a Strategic Foreclosure?
When you are in a position where you technically could be making mortgage payments, but you are opting not to, intending to foreclose your home, this is what we refer to as strategic foreclosure.
People who do this are “upside-down” with their mortgages. That means, as mentioned above, you owe more on the house than the house is worth in the current housing market. In the land of real estate, this is also called negative equity.
We Are Here to Help
While strategic foreclosure might be the right choice for you, we want you to know that there can be consequences to going through with it. Our Florida foreclosure defense lawyers want you to make this decision fully knowing what it will mean for you if you do.
There are a dozen reasons why you might be underwater on your home loan. This can put you in a particularly challenging position. You are not alone. In August of 2021, there were 1,480 housing units that went into foreclosure. It might have been something completely unforeseen that lead you to where you are now.
Maybe an unexpected medical issue, layoff in the household, or death in the family has brought you here. We’re so sorry that you have to go through this. Strategic foreclosure might be attractive to you because it can let you cut off your losses.
Possible Serious Consequences
If strategic foreclosure is something you are considering, you already know that you will likely, eventually, no longer live in the house. It does give you time to put any of the money you would have put into the mortgage into your savings. However, there are consequences.
One possible consequence is that you might go into debt. Sometimes when the bank seizes the home, they’ll sell it and then make you pay the deficiency balance.
Strategic foreclosure can also make it hard for you in the future to get a mortgage if you ever wish to own a home again. A lender might not look past this, especially if this happened fairly recently. They could determine that you’re too much of a risk for them.
Sometimes a lender will give you the mortgage but at a higher interest rate.
There can be a significant impact on your credit after a strategic foreclosure. You can see this hit your credit score about a month after your proceedings, and it will stay like that for about seven years after. Know that it can and will take some time to bounce back from this. If you already have a credit score that needs improvement, keep that in mind.
Get a Free Consultation
We have been handling foreclosure defense for over 30 years at our law firm. When you are thinking about strategic foreclosure, please give us a call right away. We’d love to hear from you to set up a free consultation.