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What Happens If You Can Not Pay Off Home Equity Loan ?
In these recessionary times, many Americans had taken out loans to buy a home or against the existing house either to refinance or buy a new house. |
The practice of taking mortgages has given rise to what has been called the sub-prime market. This market is essentially made up of borrowers whose credit history is below par or sub-prime and hence, they come under what has been called the NINJA or the No-Income-No-Job kind of borrowers.When the going was good, there were many who took loans. However, with the housing market bottoming out, it has become imperative for these borrowers to think about how to pay back the home equity loan. In many cases, the value of the house is lesser than the one that you took the loan for. So, this creates a loss for you and you do need to take a decision on whether you want to short the lender by selling off the house for a below par value or to walk away from the mortgage and damage your credit history.
Hence, the options before you are not that rosy. However, in the interests of your economic well being, you do need to take a decision pretty quickly since the housing market is not showing any signs of recovery and you need to act fast before the lender takes the house away from you. If you plan to sell your house for a lesser value and then report the same to the lender, be aware that the lender can sue you for this and hence you need to be careful about choosing this option.
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