When to Ditch Your Mortgage

Did you realize that in Novato's 94949 zip code alone there are about 108 distressed properties? In plain words there are over 300 home owners "underwater" or "on the edge." It's a tough situation. If effects kids, all of us.

"If you are thinking about walking away from your house, doing a foreclosure or doing a short sale — now is the time to do it,” Suze Orman said the other day.

Suze continues, “Do the calculations, everybody. How much is it costing you to actually stay in that house? How many years will it take you to pay more than what that house is currently worth? If it’s three years, four years, five years — are you kidding me? — that’s a house where you really need to say bye-bye.”

Do you know someone being squeezed by their mortgage? They think, "Wouldn’t it be a relief to save that money and use it our kids, retirement, investments?"

However, before you or your friend walks, ask yourself some questions:

What are your long-term goals? What do you hope to do?  If you leave your home, where are you going to go?

Call your lender. You have to make the attempt to work with them. If they won’t work with you, and almost all will not, then look at your options to ease your burden.

There are other options, including short-sale, usually the best for your credit in such situations. Foreclosure does leave a large black mark on a homeowner’s credit rating. That black mark means the person won’t be able to get another mortgage for at least seven years.

Beware of scams. Red flag: Asking for money. Do not pay anyone one dime to do a short sale. The lender, at the end of the transaction, pays real estate broker commissions. Do keep your HOA current.

Contact your Realtor, who likely has handled many short sales and forecloures (like the movie, It's Complicated).  A good agent can save nine out of 10 people going into foreclosure.