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Debt settlement, consumer credit counseling options for troubled home loans
By Peggy Stillwell on May 18th, 2010
Many consumers may have mortgages that exceed the actual value of the home, as the housing market has led to a drop in values.
As a result, people may be looking for ways to unload their properties. In a recent piece for her website, personal finance expert Liz Pulliam Weston received a letter from a homeowner who owed $202,000 on a home worth $162,000. The reader wanted to get rid of the home and try and rent for a few years rather than face the high amount they owe.
Pulliam Weston noted that on option for the reader was to contact a counselor that is approved by the U.S. Department of Housing and Urban Development. People may also consider consumer credit counseling, which can help them with their home loan questions while establishing a monthly budget that can help shave expenses.
Another option would be a form of debt settlement called a short sale, where a consumer sells their home for less than what is owed on the mortgage. The funds resulting from the sale will go to the lender to take the loan off the books.
"Short sales will hurt your credit, but you’ll be able to buy another home sooner than if you simply walk away or let your home go into foreclosure," Pulliam Weston said.
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