Question about walking away from home???

[hipmatt]

OK guys/gals. Some great friends of mine bought a small 2/2 home in Menifee for $300k during the peak of the bubble. I believe they had 0% down. Now that they realize that the home is worth only $200k max, and they could rent a home in Temecula(where family and work is)for much less than their $2200 payment and save the extra cash. The question they have is about the damage to their credit if they walk away from the home. I told them that they should do it, and that the credit could be repaired. DO any of you have any suggestions? Can the credit be repaired enough to buy a home in 2 years or so? Thanks!

[pk92108]

There are some old posts about this, so check the search feature..But I believe they can do it as long as they haven’t tapped into a home equity line of credit…Might be some tax consequences (maybe) in the form of getting a 1099 for the difference, but it is still a maybe..

Better to save 100K and repair your credit in 8 years, as long as you dont plan on buying a home in that time..The loan is secured against the property unless a home equity loan has been used..(i think)…

[pk92108]

There are some old posts about this, so check the search feature..But I believe they can do it as long as they haven’t tapped into a home equity line of credit…Might be some tax consequences (maybe) in the form of getting a 1099 for the difference, but it is still a maybe..

Better to save 100K and repair your credit in 8 years, as long as you dont plan on buying a home in that time..The loan is secured against the property unless a home equity loan has been used..(i think)…

[pk92108]

There are some old posts about this, so check the search feature..But I believe they can do it as long as they haven’t tapped into a home equity line of credit…Might be some tax consequences (maybe) in the form of getting a 1099 for the difference, but it is still a maybe..

Better to save 100K and repair your credit in 8 years, as long as you dont plan on buying a home in that time..The loan is secured against the property unless a home equity loan has been used..(i think)…

[pk92108]

There are some old posts about this, so check the search feature..But I believe they can do it as long as they haven’t tapped into a home equity line of credit…Might be some tax consequences (maybe) in the form of getting a 1099 for the difference, but it is still a maybe..

Better to save 100K and repair your credit in 8 years, as long as you dont plan on buying a home in that time..The loan is secured against the property unless a home equity loan has been used..(i think)…

[pk92108]

There are some old posts about this, so check the search feature..But I believe they can do it as long as they haven’t tapped into a home equity line of credit…Might be some tax consequences (maybe) in the form of getting a 1099 for the difference, but it is still a maybe..

Better to save 100K and repair your credit in 8 years, as long as you dont plan on buying a home in that time..The loan is secured against the property unless a home equity loan has been used..(i think)…

[bubba99]

The credit report stays negative – reports the foreclosure for seven years and seven days after the last legal action. So after all the creditors get done with their paper work – which may be a while with todays volume of repos, then seven years + of notes on the TRW, Trans Union, and Equifax reports will include the negative item.

There will be a lot of these negative items and maybe future lenders will be more lax, but I doubt it. There is no “repairing” a public record item.

Is it is a good idea to walk away or not depends on the tax consequences and new rental costs. Between the state and fed tax relief, there is a $24,000 deduction/year. At 22% fed, and 8% state nominal tax rates, that is $7200/year that would need to be offset by an equal reduction in rent vs own. If their tax rates are much lower, then . . .

It may not be a great idea to walk and rent with todays variable credit card interest rates. When a foreclosure triggers a higher rate, who know?

[bubba99]

The credit report stays negative – reports the foreclosure for seven years and seven days after the last legal action. So after all the creditors get done with their paper work – which may be a while with todays volume of repos, then seven years + of notes on the TRW, Trans Union, and Equifax reports will include the negative item.

There will be a lot of these negative items and maybe future lenders will be more lax, but I doubt it. There is no “repairing” a public record item.

Is it is a good idea to walk away or not depends on the tax consequences and new rental costs. Between the state and fed tax relief, there is a $24,000 deduction/year. At 22% fed, and 8% state nominal tax rates, that is $7200/year that would need to be offset by an equal reduction in rent vs own. If their tax rates are much lower, then . . .

It may not be a great idea to walk and rent with todays variable credit card interest rates. When a foreclosure triggers a higher rate, who know?

[bubba99]

The credit report stays negative – reports the foreclosure for seven years and seven days after the last legal action. So after all the creditors get done with their paper work – which may be a while with todays volume of repos, then seven years + of notes on the TRW, Trans Union, and Equifax reports will include the negative item.

There will be a lot of these negative items and maybe future lenders will be more lax, but I doubt it. There is no “repairing” a public record item.

Is it is a good idea to walk away or not depends on the tax consequences and new rental costs. Between the state and fed tax relief, there is a $24,000 deduction/year. At 22% fed, and 8% state nominal tax rates, that is $7200/year that would need to be offset by an equal reduction in rent vs own. If their tax rates are much lower, then . . .

It may not be a great idea to walk and rent with todays variable credit card interest rates. When a foreclosure triggers a higher rate, who know?

[bubba99]

The credit report stays negative – reports the foreclosure for seven years and seven days after the last legal action. So after all the creditors get done with their paper work – which may be a while with todays volume of repos, then seven years + of notes on the TRW, Trans Union, and Equifax reports will include the negative item.

There will be a lot of these negative items and maybe future lenders will be more lax, but I doubt it. There is no “repairing” a public record item.

Is it is a good idea to walk away or not depends on the tax consequences and new rental costs. Between the state and fed tax relief, there is a $24,000 deduction/year. At 22% fed, and 8% state nominal tax rates, that is $7200/year that would need to be offset by an equal reduction in rent vs own. If their tax rates are much lower, then . . .

It may not be a great idea to walk and rent with todays variable credit card interest rates. When a foreclosure triggers a higher rate, who know?

[bubba99]

The credit report stays negative – reports the foreclosure for seven years and seven days after the last legal action. So after all the creditors get done with their paper work – which may be a while with todays volume of repos, then seven years + of notes on the TRW, Trans Union, and Equifax reports will include the negative item.

There will be a lot of these negative items and maybe future lenders will be more lax, but I doubt it. There is no “repairing” a public record item.

Is it is a good idea to walk away or not depends on the tax consequences and new rental costs. Between the state and fed tax relief, there is a $24,000 deduction/year. At 22% fed, and 8% state nominal tax rates, that is $7200/year that would need to be offset by an equal reduction in rent vs own. If their tax rates are much lower, then . . .

It may not be a great idea to walk and rent with todays variable credit card interest rates. When a foreclosure triggers a higher rate, who know?

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