Strategic Defaults For Unemployed And Underwater Homeowners–Credit Problems After Defaulting And Ways To Save A Home

Strategic defaults on home loans have been a problem for homeowners who may be unemployed or who have an underwater home loan as there are those who feel that when their home is simply too costly to afford, a modification does not help relieve financial strains to the extent that a homeowner would want, or if a homeowner feels their property is an investment and they have lost out due to negative equity, those who have walked away have been numerous in the recent months, despite the fact that there are alternative ways that these homeowners may be able to save their home.

One argument against strategic defaults usually centers around the credit problems that a homeowner may have after leaving their home through a strategic default, but in cases where negative equity or factors like unemployment have already created problems in the life of a consumer, this may not be a deterrent for certain individuals who are simply through with trying to keep their home afloat. Reports have shown that, on average, home prices fell in the first quarter of 2011 and this has led to frustration among homeowners who are already paying on a mortgage debt that is higher than their actual property value.

Many individuals see their home as a way to gain money in the future, as homeowners who view their property as an investment will, obviously, make payments on their mortgage or even pay off their home entirely over a set period of time and then hopefully sell their home at a profit so that they can pocket their earnings and relocate into a more affordable living arrangement. Yet, in cases where equity has dropped to such an extent that a homeowner feels they may never recover, convincing these men and women to avoid walking out is a difficult task for some, despite the fact that there are ways that homeowners in an underwater position can find more affordability.

Also, in cases where homeowners may simply be unable to afford their underwater home loan payment, particularly when factors like unemployment are in place, there have been homeowners who have walked away from their mortgage in the hopes of finding a more affordable rental property or apartment before further damage is done to their credit score or they have exhausted their financial resources which will be needed to relocate.

It’s basically common sense, though, that when it comes to purchasing a home in the future, strategic defaults will be viewed very poorly by lenders, rather than a situation where a homeowner had simply faced a great deal of financial hardships and may have faced foreclosure as a result. While home loan modifications are not a preventative measure that always works when it comes to lowering a homeowner’s payment when a negative equity problem is present, and not all servicers offer mortgage principal reductions in severe cases, but exploring these options can help homeowners in even the most frustrating of situations find a solution that will not only help them gain more affordability on their home loan, if this is the issue, but some homeowners may find incentives to stay in their home despite the fact that their property value has dropped.