Dear B. Lindsay,
I sympathize with your situation, there are hundreds of homeowners right here in Chico in the same situation.
First, make sure you consult an attorney on any plan you come up with, the potential loss of your home and the effects on your credit are too important to neglect to get legal counsel.
The questions youâ€™ll want to answer for yourself are: do I honestly feel that I can afford this home in the future and do I want to keep this home? If your answer to these questions are yes youâ€™ll want to follow your lenders process for applying for a loan modification. Be persistent â€“ lenders are deluged right now and youâ€™ll need to be the â€˜squeaky wheelâ€™ to get your questions answered fully. If your answer is no the next question is â€˜how do you want to try to divest yourself of the property?â€™
A short-sale is a process whereby the lender allows you to sell your home for less than they are owed before the foreclosure date. The reason that distressed homeowners choose a short-sale is because the process is supposed to be less damaging to your credit (stays on your credit report for a shorter period of time). The short sale process can be challenging and timing is critical so most homeowners employ a real estate agent or negotiator to assist them.
Foreclosure means that the lender takes the home back. It is generally regarded as one of the most damaging items that can appear on your credit report. Because of the huge backlog of pending foreclosures, some homeowners have reported being in their homes for months before being foreclosed upon.
There are additional pros and cons to all of the above scenarios, and conditions vary from region to region. If youâ€™d like more information on conditions or procedures in the Chico area Iâ€™d be happy to provide you with more details.
Best of luck