Question
How would a foreclosure affect us in the short/long term?
We bought a home in Baltimore City in 2005. It was a renovated home and we planned to stay for 5 years. We foolishly refinanced our home in 2006. This enabled us to obtain a fixed rate, but we also pulled money out to pay off debts. At the present time, I would estimate that we are $60-100,000 underwater on our mortgage. The neighborhood is steadily becoming worse. Drug addicts, shootings, break-ins, you name it. We have since had a baby and I am uncomfortable with continuing to raise a child here. Yesterday one of our neighbors threatened my husband. I am completely at the point where I want to move. How would a foreclosure affect us? I am not concerned about our credit or owning a home again anytime soon. My biggest concern is whether or not our lender can come after us for the difference of what we owe. The only thing I am looking for is to be able to rent a home/apartment in a better neighborhood or move in with family. I believe that our piece of mind is worth walking away from our home. My husband is so worried about our credit and I am feeling that if we aren't on the same page about this, we will have to separate. Any advice is appreciated!
2 months ago - 2 answers
Best Answer
Chosen by Asker
Yes, because you refinanced and lined your pockets with the banks money in 2006 you can be held liable to repay that money. You may get out of it by filing bankruptcy. Either way you are not buying for 5-7 years and will have a hard time renting or even qualifying for many jobs with the bad credit.
by Janet P
2 months ago
Asker's Rating: 
Other Answers
If you are in state that allows for deficiency judgments, the lender can and will pursue obtaining the balance. What we are seeing come on the horizon is a lender selling a bulk of their bad paper to debt collection agencies and those companies come after you for the amount you owe. Debt collection companies are very aggressive, they will do anything your state laws allow to collect, including attaching wages and tax refunds. A foreclosure will reduce your credit score 250 - 300 points, will effect your ability to rent, get a job, purchase anything based on credit score (such as insurance, credit card rates, a car). You will not be able to purchase a new home for 7 - 10 years. You are not "walking away" it is a foreclosure, and the effects are far reaching.
by godged- 2 months ago