It’s understandable that homeowners who are facing an underwater mortgage are in a very frustrating situation, but many financial advisers are prompting these homeowners to seek out alternatives to foreclosure if they are having difficulty meeting their monthly mortgage payment as a result of unemployment or an underwater mortgage. Specifically, homeowners with an underwater mortgage have caused numerous troubles for the housing market when they have strategically defaulted and simply washed their hands of their home loan situation.
There are some reports which indicate homeowners still see strategic defaulting as an acceptable alternative to staying with their monthly mortgage obligation on an underwater home. However, homeowners who are able to make their monthly mortgage payment but choose to default on their home loan will be unlikely to receive financing for a home for quite some time down the road.
Yet, homeowners who have attempted to keep their mortgage payment current, despite having an underwater mortgage, have at times fallen upon a situation where they are simply unable to continue owning their home. However, homeowners in this situation have chosen to work with servicers to implement foreclosure alternative programs rather than simply default on their mortgage.
While options like short sales or deed in lieu of foreclosure programs are beneficial, they do still reflect poorly on a homeowner’s credit score, but not to the extent of walking away from their mortgage. There are those who feel that homeowners who use foreclosure alternative programs in cases where they can no longer afford their home or simply wish to be free of their underwater mortgage may be able to find more opportunities for homeownership down the road and in a shorter period of time.
Again, underwater home loans are a difficult situation and additional support for homeowners through state-specific mortgage assistance programs may also be available to help homeowners in such a situation. However, homeowners have been advised to avoid strategically defaulting on their home loan as this can do a great deal of damage to a homeowner’s finances and, obviously, causes a greater overall problem in the housing market.