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When deciding to make the decision to do a strategic default, it is important to weigh the pros and cons. Click here for strategic default consequences When a homeowner strategically defaults on their home, they are following the mortgage contract that states that in the event of default or non-payment of a mortgage loan, the home shall serve as collateral and the lender has the right to sell the property to get back the money they lent. The lender / bank that lent the money against the home, decided at the time of which the loan was made, that your home was adequate collateral and a reasonable risk.

Here is how to do a strategic default:

1. Decide if your home is worth keeping at the present value by looking at websites such aswww.Zillow.com or contacting a licensed real estate appraiser.
2. Make sure the lender isn’t willing to lower the principle balance or drop your rate to a payment that makes your home worth keeping.
3. Consult with an attorney or professional that knows the laws of the state where you home is located to discuss the timeline and consequences.
4. Consult with a CPA to discuss the tax ramifications of a default.
5. Make a plan as to how long you will stay in the home payment free.
6. Make a plan as to how you will use the money normally paid to the lender for your mortgage payment. (Most use it to pay down other debts and high interest loans, put money away in a savings account or certificate of deposit, or invest it wisely and conservatively.  READ MORE ON STRATEGIC DEFAULT HOW TO