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Foreclosure on investment property (land loan)

I have an investment property (land loan) that is an interest only loan. MANY of the other lots and homes around it have already gone through foreclosure so the value of the property has literally been cut in half. I was laid off and have finally secured a new job but my new income is less than half of what I was making before. The bank won't work with us to restructure or [url=http://www.mortgagefit.com/refinance.html]refinance[/url] it. We have been exhausting all options over the past 1-2 years. It is just draining our savings. My concern is we have excellent credit scores 780s and better. We have never been late on any bills and are teffified of what it will do to our credit. Does investment property (land) foreclosure affect credit the same as a home? We wouldn't mind foreclosure but there are SO many lots that are for sale around it that are twice the size or bigger than ours for half the price. We have had it listed for over a year at the lowest price in the subdivision and still no bites. Financially we are at the point of just cutting our losses. The interest only loan that we have is about to balloon next year. So the outlook is not to bright. Any advice?

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi DW!

Welcome to forums!

A foreclosure on an investment property as well as a home will affect your credit in the same way. A foreclosure will lower your credit score by around 250 points. You should contact the lender and apply for a short sale. Though you'll be liable for the deficient balance resulting from the sale of the property, the short sale will lower your score by 75-100 points.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 03:05 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

I read your advice to another person about forclosing on a land loan. You suggested contacting the lender and applying for a "short sale". Could you please explain what that is?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 03:05 | Post subject:

smith.sussane's picture
smith.sussane | Joined: September 18, 2008 09:57 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi tara!

Welcome to forums!

A short sale will help you in getting rid of the property. Your lender will consider your short sale request only if you're delinquent on your mortgage payments. The lender will sell off the property at a lower price than the amount you owe to him. The lender will come after you for the deficient balance resulting from the property sale.

Feel free to ask if you've further queries.

Sussane

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 03:05 | Post subject:

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