My question involves debt management in the State of: Arizona. I have just enough equity left in my home to cover the balance on my 1st mortgage. If I could sell and downsize, I could eliminate the rest of my debt at a much faster pace. 2nd lender(credit union) claims that this home is what secures their loan, which makes no sense to me since the equity no longer exist. I thought they could convert the 2nd mortgage to a personal unsecured loan. I assumed the interest rate would increase and that I would loose my tax deduction, but they won't even let me consider selling, even if I agree to continue making payments on the 2nd mortgage.
Even though I have not suffered a financial hardship, and can still afford payments on all my debt. What if I just walk away, what will happen then? If I ruin my good credit with a forclosure, how will that affect my ability to make purchases in the future. Any advise is appreciated!