Your Options Once You Decide to Leave Your House

If you're facing foreclosure, sometimes it's best to let the house go. Here are your options.

Once it appears that foreclosure is inevitable, many people pack up their belongings and their families and immediately look for a new place to live. They fear losing reliable shelter and want to find another home as soon as possible where they will feel secure. Staying in a house facing foreclosure can be terrifying if you think you might end up out on the street. And it may be unbearably depressing if you are reminded every day that you won’t be living there indefinitely.

While these reactions to foreclosure certainly are under­stand­able, foreclosure can actually be a time of opportunity. You will have enough time to find a new place to live. Mean­while, it may prove to be a big financial advantage to stay put for a while—maybe a long while.

So try to put fear and negativity aside as you assess your options to come up with the best choice for your circumstances.

Giving Up the House: Your Options


  • Short sale: Offer the house for sale and persuade the lender to accept the offer.

  • Walk away: Move out when it suits you and let the foreclosure proceed. Works best when your lender can’t sue you for a deficiency. 

  • Negotiate a mortgage modification: Engage in negotiations, even if you think your efforts will ultimately prove unfruitful, to avoid being labeled a "strategic defaulter" when you apply for a mortgage in the future. 

Talk to an expert to see how your choice will affect your credit. It’s not possible to really know what effect any of these actions will have on your credit—any wisdom you hear from a credit or real estate industry insider now is likely to be out of date when you get around to needing it. So when you’re ready to decide which approach to take, talk to a HUD-approved housing counselor (see our article on using a HUD-approved housing counselor) about how it might affect your credit. But don’t let credit scores be the main consideration. It’s possible to “live long and prosper” without running on the credit hamster wheel.

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