If you’re in need of foreclosure defense services, you might be thinking about a strategic default. A strategic default is when a homeowner decides their property is no longer a good financial investment and stops paying their mortgage. According to NOLO, this usually happens when the homeowner owes more than the home is worth. In this scenario, the homeowner can still afford to pay the mortgage, but it could take years before the home regains its value. This might seem like sound financial reasoning, but strategic defaults are rarely the best course of action. Here are four reasons to avoid a strategic default.
- It will affect your credit score: If you walk away from your mortgage payment, your credit score will take a significant hit, and you’ll probably have difficulty qualifying for another mortgage for at least seven years.
- You could still be liable for a deficiency judgement: If your lender forecloses on your property and the foreclosure price is less than you owe in your mortgage, you can be found liable for a deficiency judgement. The deficiency judgement would be the difference between the foreclose sale price and the amount of your mortgage.
- Having a foreclosure on your record could affect your future job prospects: It’s common for employers to check the credit score of prospective employees. With a foreclosure on your record, you many have difficulty finding a job in the future.
- A strategic default is an underhanded way to get out of a mortgage: You’ve signed a contract saying you will pay your mortgage. Failing to pay when you can afford it is an immoral way to get out of the contract.
There are many alternatives to a strategic default. To learn more about your options, contact us.
