Many homeowners with an underwater mortgage have defaulted on their home loan due to being stuck in a very frustrating situation which they feel is hopeless. Defaulting on a home loan is one of the worst things that can be done for one’s credit score and while it is understandable that someone who owes more on their home than their home is worth would be very frustrated, there are other options aside from defaulting.
There are short sale options available for homeowners who may have an underwater mortgage and simply want free of this burdensome obligation. Many homeowners see their home as an investment and if they have lost a large amount of value in their home they feel that there is little reason to continue to pay their mortgage.
Many lenders have been getting incentives from the Obama Administration if they will work with homeowners to help them short sale an underwater mortgage. There have been troubles with second mortgage holders, but incentives from the Obama Administration have helped some homeowners negotiate with their mortgage holders and get rid of their underwater home.
While short selling a home can cause a drop in a homeowner’s credit score, compared to defaulting, this drop is going to be minimal and shouldn’t cause a big problem when a homeowner goes to buy a home again in the future. Mortgage lenders often look at someone’s credit history and situations that are surrounding drops and a credit score so it will be much more beneficial for a homeowner to have short sold an underwater home than to have simply walked away.
Homeowners with an underwater mortgage are being advised to talk with their mortgage lender about short sell options or any other assistance that may be available for dealing with an underwater mortgage. Again, owing more on a home than home is worth is a very frustrating situation but homeowners have many other options to choose from in dealing with the situation other than walking away.