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Owe More than My House is Worth and Need Mortgage Help
Tuesday, Dec 18, 2007
Question: Is there any type of loan program available to refinance an upside down home loan mortgage? I owe more than my house is worth and need mortgage help!
Answer: You are not alone in this situation. Due to the downturn in the mortgage industry, a lot of people are finding themselves in the same situation. The people most vulnerable are those who bought their homes within the past two or three years and now want to sell, either because of a life change or a financial problem. Prices in some places are notably lower than they were at the peak of the market, and the costs of selling can eat up even more money.Unfortunately, since your mortgage balance is more than the value of your home, you may have trouble obtaining a refinance loan, as most lenders are not willing to extend loans that exceed 100% of the value of the property. There are still lenders out there who will be willing to lend beyond the 100% value of your home, but the interest rates might turn out to be prohibitively high and you may not be able to afford the payment. Still, there is no harm in applying to see if you can be helped.
Bills.com makes it easy to compare mortgage offers and different loan types. Please visit Mortgage Refinance Quote page to find a loan that meets your needs.
Not only will these mortgage professionals be able to tell you whether you qualify, but if you do not qualify, they can tell you what aspects of your financial situation are causing you problems, and make suggestions about how to improve your chances to qualify for a loan.
If you do not qualify for a loan, then you should consider five options:
1. Visit the Home Affordable Refinance Program Web site to
see if you qualify for this program. Mortgage providers, as a group, have been slow to embrace this program. However, homeowners who have convinced their mortgage companies to renegotiate the terms of mortgages are seeing lower payments.
2. Try and sell your house at the best possible price. Visit your nearest Assist-2-Sell Realtor and get your house on the market immediately. Sell it for what is left on your mortgage. You'll make no money, but you will be out from under the huge debt. By using an Assist-2-Sell Realtor, you do a lot of the work yourself that is involved in selling your home. They just assist you and guide you through the maze. Find a place to rent for at least a year (maybe two) until you can get on your feet again.
3. Contact your lender and discuss a short sale or deed in lieu of foreclosure . In a short sale, a lender accepts a lower amount than the balance of the loan and forgives the deficiency balance. A short sale or deed in lieu of foreclosure must be approved by the lender.
4. Rent out a room. Consider renting a bedroom (and preferably a bath) of your house to a paying roommate. A lot of students and young professionals who work two jobs or who work and go to school at same time are looking for affordable housing. It could be a win-win situation
2. Try and sell your house at the best possible price. Visit your nearest Assist-2-Sell Realtor and get your house on the market immediately. Sell it for what is left on your mortgage. You'll make no money, but you will be out from under the huge debt. By using an Assist-2-Sell Realtor, you do a lot of the work yourself that is involved in selling your home. They just assist you and guide you through the maze. Find a place to rent for at least a year (maybe two) until you can get on your feet again.
3. Contact your lender and discuss a short sale or deed in lieu of foreclosure . In a short sale, a lender accepts a lower amount than the balance of the loan and forgives the deficiency balance. A short sale or deed in lieu of foreclosure must be approved by the lender.
4. Rent out a room. Consider renting a bedroom (and preferably a bath) of your house to a paying roommate. A lot of students and young professionals who work two jobs or who work and go to school at same time are looking for affordable housing. It could be a win-win situation
for both parties. You get extra rental income, you have someone else pitch in for bills, and you can deduct all your rental expenses from your taxes. Check Rent.com .
5. Bankruptcy is the final option to consider if all others fail. See the Bills.com article Types of Bankruptcy to learn more about your options.
Try to avoid foreclosure . However, if you are a California resident facing foreclosure, you need to understand the state's recourse and non-recourse rules so you know what to expect in a foreclosure. Other states are non-recourse as well, but none use rules as intricate and complicated as California's.
If you would like to read more about mortgage refinance loans, I encourage you to visit the Bills.com Home Refinance Resources page. If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the loan options available to you.
You should also visit the Bills.com Credit Solutions page to learn more about credit, credit reporting, and ways to improve your credit score which should help you qualify for better loan terms.
I wish you the best of luck in finding a lender willing to work with you. I hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
5. Bankruptcy is the final option to consider if all others fail. See the Bills.com article Types of Bankruptcy to learn more about your options.
Try to avoid foreclosure . However, if you are a California resident facing foreclosure, you need to understand the state's recourse and non-recourse rules so you know what to expect in a foreclosure. Other states are non-recourse as well, but none use rules as intricate and complicated as California's.
If you would like to read more about mortgage refinance loans, I encourage you to visit the Bills.com Home Refinance Resources page. If you enter your contact information in the Bills.com Savings Center at the top of the page, we can have several pre-screened mortgage brokers contact you to discuss the loan options available to you.
You should also visit the Bills.com Credit Solutions page to learn more about credit, credit reporting, and ways to improve your credit score which should help you qualify for better loan terms.
I wish you the best of luck in finding a lender willing to work with you. I hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
Also, make sure to get a free financial health check-up with Bills IQ!
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1. Posted by Alice on Friday 26th December 2008 11:51
Hi, I currently have two home mortgages i would like to combine into one but my problem is i owe more than the house is worth (it is a condo)well my problem. is there any program that will do a refinance under this conditions? Also one more Question is it possible just to refinance one mortgage my 2nd one which has a big intrest rate the loan is only 57000. Thank you Alice
2. Posted by Bill on Monday 29th December 2008 11:27
If you loan balance is more than what your home is worth, then it is unlikely that you will be able to find a lender that will be willing to refinance. You can refinance only your second mortgage, but again, you will find that to be a difficult proposition considering you do not have any equity left in your home.
3. Posted by WILLIAM S. TRIGGS on Thursday 8th January 2009 17:32
Purchased dbl wide Mobile home in 55 and over park, 1997. Paid premium and mortgaged w/apr loan thru wash. mutual, they sold loan to green tree cpl years ago. Park rental has grown from $250.00 per month to $500.00. Owe $21,000.00 on home, now worth appox. $16,000.00. Park has over twenty empty spaces, no one wants to buy existing homes because of rent and attitude of corp. ownership of park. We want out, what do we do? Don't want to walk away from mortgage, but will if need be. I am 72 years old and a veteran. my wife is a few years younger.
4. Posted by Sam on Friday 9th January 2009 08:28
You need to consult with an attorney licensed in your state to determine what the possible consequences of allowing your home to go into foreclosure would be. In many states, a mortgage company can come after former homeowners if the foreclosure sale does not cover the full balance of the mortgage, which it frequently does not. Given yours and your wife's age, I assume that you are retired and on a fixed income; if that is the case, then the likelihood of the mortgage company trying to pursue you after foreclosure would likely be greatly reduced, as most forms of retirement income (Social Security, most pensions, etc.) are exempt from attachment by judgment creditors. If you do not have any other substantial assets, the creditor may have no way to collect even if it does try to pursue you for any remaining balance on your mortgage after foreclosure (called a "deficiency balance"). Since you owe more on your mortgage than your mobile home is worth, your monthly mortgage payments are not currently building equity, and you may do better to rent until the housing market improves and you are able to purchase again. Again, I strongly encourage you to consult with an attorney in your area to discuss the financial difficulties you are facing to help determine the best way to move toward a prosperous future.
5. Posted by Lorry on Thursday 29th January 2009 13:58
I live in NJ. Bought a townhouse in 2006 for $275K @ 6.50%. Put $25K down. I now owe $214K on my mortgage. Shortly after I took an equity loan to pay a higher monthly car payment, 20K remains. My townhouse is now worth less than what I owe. Some have sold in my development for less than what I owe. And currently there are a few on the market. I did have my townhouse on the market a few times but no bites. Now my financial situation is different, I have my mortgage payment, the equity payment and 2 credit cards with high amounts on them. I'm currently not using the credit cards unless it is an emergency. For a year I have been moving money from a savings acct over to pay my monthly bills. My savings is just about dry. At that point I have nothing but pay check to pay check to pay my bills. I do not make enough to cover my monthly bills. I am looking for a P/T job, but have been unsuccessful so far. I have been told I can't refinance because I owe more than the worth of my home. I don't want to ruin my credit, but I no in the near future I will not be able to meet my bills. Please help with some advise. Thank you.
6. Posted by Bill on Friday 30th January 2009 11:38
You are not alone in this situation, given the mortgage meltdown, a lot of folks are finding themselves owing more that what their home is worth. Refinance is going to be difficult, but you should ask your lender to see if they will be open to do a loan modification or re-structuring so that you are able to afford your payments.
7. Posted by Paul on Wednesday 18th February 2009 08:07
One of the comments said about renting out a room and then deducting the rent from your taxes. How is that, rent is considered income isnt it. Besides the tax benefit is nowhere near good enough, at least in my area (oklahoma) to bother reporting. Btw, having a friend or (whoever) share the bills is not rental income, which I have done also.
8. Posted by Anna on Monday 2nd March 2009 10:33
I purchased my home for $199k Feb 2006 most of the homes on my street have now foreclosed and are been sold for under $50k even the new homes are going for only $80k Is there anything I can do?
9. Posted by Bill on Tuesday 3rd March 2009 10:24
You are not alone in this predicament, a lot of home owners are faced with the same situation. You may qualify for the Home Affordable Refinance Program You can also discuss the short sale option with your lender. In a short sale, a lender would accept a lower amount than the balance of the loan. A short sale has to be approved by the lender.
10. Posted by Vivian Keidel on Friday 17th July 2009 13:34
We purchased our home in 2006. We owe about 50,000 more on it than it is worth. We also recently purchased a caras our other car is a 1991. We tried to make things work using credit cards hoping the market would turn around, it did not. So, the credit card companies have lowered our limits, doubled or more our APR and we are on the verge of bankrupsey. If we do decide to go that route, will we lose our home and car? We do have enough income coming in, we are both retired, to pay our car and mortgage.WE might also be able to pay off our credit cards if they would lower our APR's.
11. Posted by Bill on Friday 17th July 2009 14:35
You face several tough issues that I can't explain adequately in this space, so follow the links I provide here to learn more. Let us deal with the mortgage first. Go to the Home Affordable Refinance Program Web site to see if you qualify for this program. An option, as you suggest, is a Chapter 13 bankruptcy. If at all possible, stop a foreclosure. Regarding the credit card debt, learn about your debt consolidation options, including negotiating a lower interest and principal either yourself or with the help of a settlement company. Regarding your concerns about losing your house and car, you need to understand your rights. Read my Advice on help with bills in collections to learn more about the collections process.