Foreclosure Looming? When Does It Make Sense to Give Up Your House?
FAIR Counselors usually make giving up the home the last resort for homeowners facing foreclosure. We understand the process of leaving the place you and your loved ones have called home for so many years is extremely difficult and depressing. However, there is some hope in giving up your home when the risks of foreclosure and surmounting debt are much higher.
The ideal scenarios for homeowners who are prime candidates for giving up their homes in foreclosure are varied but here is just one example:
Just 8 months into a newly modified loan Diana started falling behind on her mortgage payments again. She tried to modify the new loan without success and her credit card debt began to pile up on her as well. Once her loan was reviewed by a FAIR Counselor, she found that her home’s value had dropped to half of the amount owed. In 20 years she would be even at equity and in the process would pay in upwards of $1 million.
In Diana’s position and for many homeowners like her, it is time to ask yourself the most important question in the entire process: Can I still afford to keep my home? Apart from the emotional considerations that surface whenever a foreclosure is threatening your household, there are financial factors that must take precedence.
A large factor in this decision will be in whether you have equity in your home. Unfortunately for most homeowners there is only negative equity and selling one’s home would offer less money than what is owed on the mortgage and other home loans. Generally, your equity amounts to the difference between what you owe on the property and for how much it can be sold.
Your home’s worth will determine your asking price if sold. These days it’s not so easy knowing how much a home is worth, however with help from experienced distressed property agents like FAIR Counselors, you can receive an informed estimate on the selling price of your home. Estimates are generally based on values of surrounding homes in the neighborhood as well as the appraisal of the home.
There are things you can do to help increase the value of your home, although it takes an experienced advisor to make the necessary upgrades or changes needed that affect your asking price without investing too much during such a cash strapped time.
Overall, if you find yourself significantly upside down on a mortgage there’s not much point from an economic standpoint in keeping your home. To quantify it, if your home’s current value is 25% less than what you paid for it, it would make sense to give up your house and sell.
FAIR offers swift relocation specialists to help homeowners in this position alternatives to rent. Our company also, lists your property but not before staging the home and offer a complete marketing package to get your home sold and for top dollar.
If you are considering giving up your home and would like to speak with a FAIR Counselor about making this important transition to avoid foreclosure and overwhelming debt, contact us, chat with a counselor or visit our offices Monday-Friday 9am- 6pm: 909 N Sepulveda Blvd. Suite 385, El Segundo Ca 90245.