When is Foreclosure the Best Option?
A foreclosure can be a very difficult decision to make because of the life-altering pros and cons that come with it. In certain situations, the pros of foreclosure outweigh the cons of the homeowner’s current situation. The following circumstances may be instances where foreclosure may be the best option:
Declining Value
One of the most common reasons for choosing to accept foreclosure is a matter of declining property value. In the event that the real estate market begins to decline, making your home worth less than what you owe on the mortgage, you may see foreclosure as an advantage. The pros to foreclosure in this situation are:
1) It alleviates you from paying into a mortgage that likely will not provide a return on investment.
2) It provides a quick alternative to waiting, sometimes years, for the market to turn around.
On the other hand, if you plan to purchase a new home after forfeiting a home with declining value, foreclosure will restrict you from doing so for up to seven years.
Recover Financially
If the reason you’re contemplating foreclosure is simply lack of funds, foreclosure may be an enticing option to help you build up enough savings to start fresh. Once a foreclosure officially begins, the lender is not allowed to make attempts to collect payments, even while the homeowner remains living in their home. This means that for the entire length of the pre-foreclosure/foreclosure process you will not be obligated to pay your monthly mortgage. Because foreclosures can often take years to complete, the homeowner has the opportunity to save money throughout this time as they’ll be living mortgage/rent-free.
However, if the issue is simply catching up on payments, foreclosure alternatives such as loan modifications or other alternatives may be less damaging options.
Multiple Mortgages
Sometimes homeowners simply need to rid themselves of a second mortgage responsibility as soon as possible to be able to keep up with their primary residence. This could be due to declining property value, or simply an impromptu or fast move. If the home in question doesn’t sell quick enough, the homeowner may be better off accepting foreclosure than to risk losing their primary residence because of a draining second mortgage payment.
If you are considering foreclosure, it is best to speak with an experienced foreclosure defense attorney as early in the process as possible. To discuss your specific situation at length, and determine all options available to you, contact our office to schedule a consultation. Our office can be reached at (702) 998-1188, info@ljlawlv.com, or by scheduling a consultation online.
For more information regarding foreclosure and other related topics, check out our foreclosure defense blog, or foreclosure defense TV playlist on Youtube.