There are thousands of investors who are delinquent on both investment properties and primary residences, and many are simply packing up and walking away. This is due to a number of factors like relocation. If you have determined that your home is simply too expensive, walking away has become a popular decision for those who are finding it impossible to make good on the loans they borrowed.
Before doing so however, it is important to realize that you do have some options when it comes to staying in the home and that you can buy at a discount in the market today. The first step is to contact your mortgage company and see what kind of assistance they can offer. They may be willing to restructure your loan in a way that can get you caught up in a short period of time, at the same time put you on track to rebuild your credit score if it has fallen due to missed mortgage payments. If you have exhausted all options through your current lender and they are unwilling to offer any kind of alternative that makes sense for you, you should consider selling the property.
Because of the glut of foreclosures in most regions across the country, it is likely that the real estate will need to be priced aggressively and competitively compared to similar homes in the market. Consult with a trustworthy broker to determine the best asking price for the home to ensure a low market time and a clean sale. By selling the home you hopefully can pay off your bank. If it is worth less on the open market than what is owed as debt, your lender may be willing to cooperate with a loan modification and work with you and your buyer to come to an agreement on sale price. A short sale is simply when the bank is in a position to accept less for the property than what is owed to them on the primary lien. More and more banks are becoming more flexible when it comes to what they are willing to take.
If you find that you are unable to sell the property or receive any helpful terms from your current mortgage lender, and your credit is too screwed up to restructure the loan, walking away from a failed investment and cutting your losses is not the end of the world. Many purchasers have lived in their homes for years, and there is a sentimental attachment to the property after a while.
But if the home is too expensive on a monthly and annual basis and you simply cannot afford to stay in it, then there is no shame in making the decision to walk away before you dig a deeper hole and possibly one that you cannot get out of. You may be able to stabilize sooner the faster you cut loose of the bad investment and start to stabilize your financial situation.