An estimated 11 million home owners owe more on their mortgage than their property is worth. This has caused more home owners to consider walking away from their mortgage and home ownership, even those who can still comfortably afford to make their payments, also known as strategic default.
When a homeowner walks away from a mortgage this usually results in either a short sale or foreclosure. There may be far more consequences than what most home owners have ever considered.
Also, there could be the potential for deficiency risks when walking away from a home, which largely varies from state to state. Lenders in some states may sue you for the difference between what you owe and what your short-sale or foreclosure proceeds are.
Home owners should also weigh the potential difficulty they may face from moving as well . If moving into a rental property, they’ll have to convince a landlord to rent to them after they have the red flag of missed mortgage payments on their credit record. Paying for moving expenses — which many walkaways fail to consider — can quickly add up as well.
As the number of employers eyeing employees’ credit profiles continues to grow home owners may also find professional consequences from walking away from a mortgage,
The consequences include everything from badly affected credit to potential tax consequences and deficiency risks. There are even possible professional implications. Home owners' credit scores will be badly hit regardless of whether they attempt a short sale or have their property foreclosed on.
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