 "Strategic" defaults seen as option for more people, but should it be?Tuesday, December 21, 2010 - Article by: Scott Lundquist -
RealtyTrac recently released a survey that indicated that nearly HALF of homeowners would be willing to consider "strategic default" on their home loan. A strategic default is when you intentionally default on a home mortgage that you are otherwise able to afford because you owe more than the home is worth.Now without getting into the ethical debate of doing such a thing, there are real consequences to doing so. For starters, your credit profile will be severely damaged, and it will take a lot of hard work to rebuild it to its' pre-default state. In the meantime, your ability to attract new credit will diminish and you may find yourself paying more for items such as car insurance, as most insurers factor credit scores into your renewal rates. You will also have to wait a long time to get another mortgage. Fannie Mae has recently increased the waiting period for borrowers with prior foreclosures that are not tied directly to a divorce, loss of job, or medical situation.A strategic default is a drastic step, and please know that there are options available NOW that specifically address borrowers that are "under water" on their homes. Contact your local mortgage professional for details. |
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