 TITLE: What Is a Strategic Foreclosure? CONTENT: What Does It Mean to Walk Away From Your Home Loan?\n---------------------------------------------------\nReasons beyond a homeowner's control can wreak havoc on a property's value and cause you to wind up with negative equity and limited options. When you're upside down on a mortgage, you may have a hard time selling your home or you might be frozen out of certain other options such as refinancing.\nWhen breaking even on your mortgage is becoming increasingly out of reach, a strategic foreclosure essentially allows you to cut your losses. It may involve redirecting your mortgage payments toward other debts while building up your cash savings until the bank eventually seizes the property. In addition to devastating your credit, which we'll unpack shortly, other consequences may also include:\n*   **Possible debt after the foreclosure:** Once the foreclosure goes through, the bank will likely try to sell the property. In some cases, you may be obligated to pay the difference between your outstanding loan balance and the final sale price (also known as a deficiency balance).\n*   **Difficulty qualifying for a future mortgage:** When applying for another mortgage down the line, lenders will be wary of approving your application if they see that you've defaulted on a past home loan, especially if it happened recently. Others may charge you a higher interest rate or tack on extra fees to mitigate their lending risk. END