What happens if one lets their house go back to the bank just because it can't be sold in today's market?I paid $189,900 for it and now the brand new townhouses are going for $149,000!! I can't take a $40,000 loss!! I just don't see anyother way out. | |
The townhouse doesn't go back to the bank, the lender forecloses.
Your credit is ruined, you pay more for everything that is based on credit score, and you don't purchase a new home for at least 2 years, probably longer.
The problem with most people that purchased homes in the past 6-7 years that's hurting everyone now is that most were unrealistic about the growth of equity in real estate and lack any real commitment to just about anything long term.
You want to walk away from a home you promised to pay for and the results will loom over your head longer then it'll take your value to recover the $40,000.
Just stick it out, there's a reason mortgages are 30 year loans, it's expected you're mature enough to see it through.
Call these people at this loss mitigation company 562.645.7480 they'll work out a deal with you're lender that won't cause you to look back in ten years and realize you made a mistake.
Short Sale.
I think most banks will accept a short sale. This happens when you sell the house for its CURRENT VALUE - even if its less then what you owe on it.
Once that happens, (with the banks permission), you might have to do some funny stuff to your taxes.. i.e that 40,000 would be taxable to you i believe - i am not sure.
but if you were to short sell it - it wouldn't go on your credit.
Also if you prove that you are trying to sell it, the bank might give you more time to work out something.
IF you let the bank foreclose they will try to sell the house but it will probably sell for less than you owe. You will owe the difference between what it sells for and what you owe. You will have a default on your credit.
