• Steve 


    San Francisco, CA

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  • Hi

    Interesting question. In general AZ is a non-recourse state, which means that a homeowner can return the house in lieu of the mortgage and not be liable for any outstanding principal for the primary mortgage in the event of a foreclosure, however if you are considering selling and the proceeds will be less than the principal owed, then you will have to negotiate with you lender to see if they are willing to accept a short sale and have the proceeds be less than the principal owed.

    Given your situation it probably makes sense for you to consult with a real estate attorney in Arizona who can review the options you have. A strategic default and foreclosure might save you some money, but it could impact your credit. It also may not save you money if your in an HOA or have a second mortgage on the house like a HELOC. A short sale might be a reasonable approach, but you need to talk with your lender about whether they will accept it.

    There's some useful information in this link:

    You can also talk with a local fee only certified financial planner who may be able to help you with some of these questions:

    Good luck.

  • Login to rate this answer:   Answered on 2/27/2013
**All above answers are provided as general information only. No warranty is made regarding the fitness or accuracy of the information provided in this answer. You should seek advice from a licensed CPA, attorney or CERTIFIED FINANCIAL PLANNER™ as to your unique financial situation.