Pay the mortgage or just walk away?

As the housing market continues to drag, just walking away from home is becoming a more tempting option for many Americans.

Walking away isn’t risk-free. A foreclosure stays on a consumer’s credit record for seven years and can send a credit score (based on a scale of 300 to 850) plunging by as much as 160 points, according to Fair Isaac Corp., which provides tools for analyzing credit records. A lower credit score means auto and other loans are likely to come with much higher interest rates, and credit card issuers may charge more interest or refuse to issue a card.

Filing for bankruptcy also may mean a hit to your credit rating, but because the people who go this route usually already have the lowest ratings, many actually see their scores rise within a year.

A recent article from the New York Times answers some of the “burning questions to ask before you stop making mortgage payments.” Read it here.

 

By Doug Beaton

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