Pay your debts through Foreclosure

There is a way to take advantage of your mortgage lender’s incompetence and inefficiency.  All you have to do is decide that you are willing to let your lender foreclose on your house, and stop paying your mortgage.  You can then use the money you would have paid for your mortgage to pay down your other debts.

Let’s say your mortgage is $1,000 a month, but you can afford only $800 a month.  By not paying your mortgage you could use that $800 to pay down your credit card debt.  $800 may not seem like much, but the average length of time it takes for the lenders to execute a foreclosure is up to more than 14 months.  14 times $800 is $11,200!

You should not do this unless you are willing to lose your house, or know that you have no choice.  If you think you can get your lender to lower your payment to 31% of you income, and you are willing to pay that amount, you have a choice.  You could do a mortgage modification.  (For more information, click here to our blog entry on qualification for mortgage modification.)

If you do choose the foreclosure option, be sure to save some of the money for rent (first, last and security).  You will need it when you move out.   And something should be set aside for possible legal fees.  (For example, post-foreclosure bankruptcy may be necessary in some situations to get rid of the part of your mortgage not covered by the sale of your house.)

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