Should I Let the Bank Foreclose?

Some homeowners will hand their keys over to the bank.

Building a Cushion

Homeowners who are in danger of being foreclosed on often don't have savings to fall back on. The process leading up to foreclosure or voluntary surrender of their property can allow them to save up a small cushion that can be used for relocation expenses.

Short Sales May Be Better

As opposed to a voluntary surrender or foreclosure, a homeowner who cannot afford to keep up with payments can look into a short sale. With a short sale, some homeowners are given up to $3,000 in relocation assistance and do not have to worry about a foreclosure on their credit report.

Bottom Line

Foreclosures, voluntary surrenders and even short sales will have a damaging impact on a homeowner's credit report. However, short sales will often result in the least amount of damage to a credit report, which can help a consumer get back on his feet and purchase another house in a few years as opposed to up to five years with a foreclosure.

References

• American Cash Flow: What Home Owners Should Know Aboout Foreclosure and Short Sale
• Military Money: What's Important to Know About Foreclosure