Posted on: 07th Aug, 2009 10:07 am
my husband and i purchased an investment property (land) with an unsecured loan with the overly optomistic plans of reselling it for a profit. it was an interest only loan for the first 5 years. that was three years ago. when the loan was closed we didn't even own a home. we had just sold our primary home and were renting until the home we were going to purchase was complete. of course, with the down turn of the market the investment property is only worth 40% of the purchase price. we will not be able to make the payment once it becomes principal plus interest. i am assumming that no bank will refinance because the property isn't worth anything near what we owe. we have never missed a payment on this or any other loan. we currently have exceptional credit scores. what are our options? if we just let it go into forclosure, what can they come after--especially considering it was unsecured. we currently own a home, have 401ks, iras, etc. we have no idea what to do. we shouldn't need to buy anything in the next 7 years, so isn't forclosure our best option eventhough it goes against everything we have ever believed in.
Hi Guest,
You can let the property go into foreclosure but it would badly affect your credit score. A foreclosure will lower your credit score by 200-250 points. Moreover, the lender would sue you for the deficient amount resulting from the sale of the property. If you are unable to pay this amount, then he may place lien on your home.
I would suggest you to speak to your lender about deed in lieu of foreclosure. Though it would lower your credit score by 250 points, you won't be liable for the deficient amount.
You can let the property go into foreclosure but it would badly affect your credit score. A foreclosure will lower your credit score by 200-250 points. Moreover, the lender would sue you for the deficient amount resulting from the sale of the property. If you are unable to pay this amount, then he may place lien on your home.
I would suggest you to speak to your lender about deed in lieu of foreclosure. Though it would lower your credit score by 250 points, you won't be liable for the deficient amount.