4. Potential for Foreclosure
- Risk of Foreclosure: If you stop making payments because your home is underwater and you can’t afford them, the lender may initiate foreclosure proceedings. Foreclosure can have severe consequences, including a significant drop in your credit score and the loss of your home.
- Deed in Lieu of Foreclosure: As an alternative to foreclosure, you may negotiate a deed in lieu of foreclosure with your lender. This allows you to voluntarily transfer ownership of the home to the lender to satisfy the mortgage, avoiding foreclosure but still affecting your credit.
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