Many homeowners who have experienced an underwater mortgage have been very frustrated with the situation, which is understandable. When a homeowner owes more on their home than their home is worth it easy to see why some homeowners have sought help through principal reductions, refinancing, and any other form of mortgage assistance they can find.
However, homeowners have grown so frustrated in many cases that they simply walked away from their home loan and defaulted on their mortgage. Some homeowners were unconcerned with the damage this does to their credit score and felt that since their home is an investment and its value had declined to such a state where they were unlikely to ever regain anything, there was no reason for them to keep making mortgage payments.
Yet, there is the problem that someone’s credit score could be hurt so badly that they would be unable to purchase another home for close to a decade. According to many reports, it may take a homeowner as long as eight years to improve their credit score or get back into a position where a lender would be willing to offer them a home loan.
This is where a short sale comes into play and can be beneficial for a homeowner who may be frustrated with their current mortgage situation and simply want out. There can be troubles if a home has a second lien, but there are incentives from the government that will help homeowners who want to short sell their home and walk away from an underwater mortgage.
Anyone with an underwater mortgage will need to talk with their mortgage lender about what must be done when it comes to short selling their home. While it may cause some troubles and take the work of both primary and secondary mortgage holders, a short sale is going to do far less damage to one’s credit then walking away altogether. Many financial advisers are telling homeowners that if they are tired of their underwater mortgage short selling will be their best option and in their best interest when it comes to doing as little damage to their credit score as they can.