If you’re a struggling homeowner, remember the safest option is always to keep making your mortgage payment. However, if you can’t pay, try to work with the government’s foreclosure prevention program. If that doesn’t work, consider all of your potential options and the affect each one will have on your credit scores before making a final decision.
Defaulting on a loan should always be the last resort. The worst credit mistake a homeowner can make is to wait until they are in default before planning a loan modification or sale of their home. These processes can take time and each late or missing payment will further harm credit scores. For more detailed information read the Struggling Homeowner’s Guide to Credit Score Consequences and contact your accountant or tax lawyer.