June 23, 2006
Debt problems? Foreclosure need not be the answer
If you have used up all the equity on your home, you are probably feeling extremely lost and dejected. You have probably even thought of walking away from the whole thing and letting things take their own course. In other words, you probably think foreclosure is the only option available. Take heart. It need not be so. One of the first things you need to do is banish the thought of foreclosure from your mind.
Apart from the emotional aspect, it will also be a big financial loss to you. How? Well even if you allowed foreclosure, you would still owe your loan amount or the balance on it, in addition to the fees. So if you allow the bank to sell your house and the price it gets is not as good as you thought it should be, you are left with a huge deficit. Whatever you decide to do, be sure you understand the long-term consequences of your actions, including the effect of your choice on your family situation. There is more than money at stake here.
Here is a viable option that could help you come back from the brink. It’s a simple plan, which can help you increase your income or reduce your expenses until you can come up with the mortgage deficit. You might consider renting your home. While this is a last-option kind of thing, if you can do it carefully, you will find that you can earn some money from it. Although not ideal, this might buy you some time for saving the required amount. With the right people in your home and a little luck, you may be able to ride out the storm.
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