Goodspeed: Walking away from a home is the last resort

Let’s say it really is underwater. You should contact your lender and see if the lender might be able to help.

QUESTION: I am single and in my early 70s. My mortgage is underwater and I am sick of throwing money down this drain that also needs a lot of repairs. I am thinking of just walking away. I know my credit will be hurt, but I do not intend to buy again, but just rent.

ANSWER: You didn’t ask, but here’s my two cents worth: You say your home is underwater. This means that you owe more on your mortgage than the home is worth, which might or might not be true. In many communities, homes have risen steadily – some even sharply – in value over the last few years.

Your home might be worth more than you think, although if it needs a lot of major repairs, maybe not. In any event, you would be wise to contact a local real estate agent and ask him/her to determine its value. Once you ascertain the home’s worth in today’s market, you can decide if it is underwater.

Let’s say it really is underwater. You should contact your lender and see if the lender might be able to help. For example, the lender might be able to work with you to refinance the home at a lower interest rate or extend your mortgage term.

If you have truly decided nothing will work, you can ask the lender about a short sale. This is where you sell the home for less than your mortgage amount. You will need to find a buyer and ask the lender to approve the sale. The lender may also cancel the unpaid balance of your mortgage debt. You should ask for this.

Unfortunately, your credit will suffer for many years no matter what you do. A loan modification is better than a short sale which is better than a foreclosure. But all will impact your credit. And even though you say you do not want to buy another home, poor credit will follow you into the rental market.

Poor credit will impact you in other ways, too – buying a car, obtaining insurance, credit card, etc., etc. You also need to factor in the cost of moving.

You have to live somewhere and rent can be very high in many communities, not to mention setting up a home, paying security deposits, turning on utilities, moving your belongings, etc.

Try to ascertain what your home is really worth and then approach your lender to see if some kind of solution can be found. I would say walking away is the last resort.

Linda Goodspeed is a longtime real estate writer and author of “In and out of Darkness.” Email her at: