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Advice on actions to take if you are upside down on your mortgage - The Bills.com Blog
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Advice on actions to take if you are upside down on your mortgage
Friday, Jan 25, 2008
Question: What if you owe 550k on your house split between a first 440k and a second 110k, but due to home pricing dropping, my house is now worth 400k. What can I do?
Answer: You are not alone in this situation, may people are finding themselves in an "upside down" situation. First of all, if you can afford your payments, then stay on course. Hopefully, the market should turn around and you should be in a better position to maybe start thinking of a refinance. If you are thinking about a refinance, I do not think that it will be a viable proposition given the fact that the new loan would have to finance 137% of your value. While loans of up to 125% LTV are possible, they are very rare and will turn out prohibitive, cost wise.If you have having difficulty keeping up with the payments, you may want to consider a short-sale, in which your mortgage company would accept less than the full balance of the mortgage to settle the
debt. You would then sell the home and pay the mortgage company whatever you received, and the mortgage company would forgive the remaining balance. If you are interested in a short sale, the first step is to contact your mortgage lender to find out if this is an option. You can only proceed with a short sale with the consent of the mortgage holder, so it is imperative that you communicate with the lender. For more information about short sales, you can visit ehow.com to learn How to do a short sale. Generally speaking, a short sale is a much less painful process than allowing the property
to fall into foreclosure.
If your lender will not allow you to conduct a short sale, you may also want to consider asking the lender about a "deed in lieu of foreclosure" agreement, which involves surrendering the home to the lender to prevent foreclosure. I strongly encourage you to speak with a qualified attorney before making any decisions regarding your home, as your state's laws could significantly affect how you decide to resolve this problem.
I hope that the information I have provided helps you Find. Learn. Save.
Best,
Bill
www.bills.com
If your lender will not allow you to conduct a short sale, you may also want to consider asking the lender about a "deed in lieu of foreclosure" agreement, which involves surrendering the home to the lender to prevent foreclosure. I strongly encourage you to speak with a qualified attorney before making any decisions regarding your home, as your state's laws could significantly affect how you decide to resolve this problem.
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 Joe Padilla on Monday 2nd February 2009 11:46
I also owe more for my home than is worth,i see all the help out thare for those whom stop paying..and getting help by lowing thier home to meet thier needs.What happens to us that keep paying? no help.i'm just in my last leg..not sure what to do any more....why can we get any help???
2. Posted by Bill on Monday 2nd February 2009 17:19
Bill, I totally empathize with you, but there is only so much help available out there and every program has their specific requirements. My only suggestion is to keep looking and researching.
3. Posted by nelson bates on Thursday 26th February 2009 19:40
house burndown due to Sylmar-Sayre fires...rebuild..but,now loan is bigger than actual home, which is currently none existing...what should i do?
4. Posted by Bill on Tuesday 3rd March 2009 10:27
You will need to discuss your situation with your lender. What are they suggesting? Was there any insurance cover? Worse case scenario, you might be faced with foreclosure.
5. Posted by Kim on Sunday 29th March 2009 14:04
Divorced 9/2008 per decree, I had 6 months to refinance home into my name. Due to being upside down, I am unable to do that. Loan is not assumable. I have a 15 year term on mortage. I'm able to afford current payment, but it's hard. Not behind with excellent credit/good income. Ex husband has since bought a new home and would like his name off this home. About 40,000 in negative equity which I do not have. Is there anything at all I can do?? Any information would be greatly appreciated. Thanks you.
6. Posted by Bill on Monday 30th March 2009 08:54
You should visit this website to see if you qualify for a refinance based on the new plan announced by President Obama: http://www.financialstability.gov/makinghomeaffordable/refinance_eligibility.html
7. Posted by John on Thursday 2nd April 2009 23:11
I currently co-own a townhouse, and my room mate is getting married and I am trying to get his name off the title and put the mortgage in my name. I tried to refinance but the loan was denied because the appraisal came back 5,000 under the remaining on the mortgage. Due to the type of loan, I can't get an Assumption either. I have never missed a payment. If I am able to get his name off the title, my percentage of income to mortgage would be around 40-45%. Any suggestions? Thanks.
8. Posted by Bill on Friday 3rd April 2009 13:21
That is a difficult proposition considering that your debt to income ratio is turning out so high. Refinancing is the only way for you to transfer this only in your name.
9. Posted by Tony on Sunday 31st May 2009 10:25
We are keeping up with our payments but have two payments because we didn't put anything down on our house, but our rates are high, the house value is not worth what we paid, our interest rate will change in the near future. I would love to pay less interest on both of our rates. Any suggestions?
10. Posted by Marie on Monday 1st June 2009 04:22
I owe $173,000 on my purchased new 2004 home, that I'm now told it's worth $88,000, are hit hard by foreclosures and unfinished communities. I'm an entrepreneur,the business is located 2 hours away from the home. I have requested a new loan at the current value from my mortgage company. Lost $20,000 on the down payment. Good credit, pay on time. Sick to my stomach, no options sound good.
11. Posted by Bill on Monday 1st June 2009 09:22
Tony, Marie - Refinancing will be difficult considering that you are upside down on the home value vs. the loan that you owe, you should see if you qualify for a loan modification based on the new initiative announced by the present Government. You can check to see if you qualify here: http://www.makinghomeaffordable.gov/
12. Posted by Brad on Thursday 13th August 2009 11:09
My job is being moved to out of state and I want to move with my job. I am flipped on my house by about $15k. What do I do? What help can I get? Will one of the banks I owe let me set up a payment plan to pay off the amount? I will not have the money at close.
13. Posted by Bill on Thursday 13th August 2009 12:28
1) Consider renting the property. 2) Consider Making Home Affordable although to qualify for this program you need to reside in the property. 3) Try negotiating directly with the lender about a mortgage refinance. 4) Talk with your bank about a loan for the $15,000 balance. The difficulty with this loan is that you are moving, and lenders like to lend money to people who have lived in one place for a long period of time, AND the loan would be unsecured. However, $15,000 is not an absurd amount to borrow assuming that your debt-to-income ratio can handle it.
14. Posted by Daniel on Monday 2nd November 2009 19:14
My job has transferred me to a new city. Im a upside down on my house by $80,000.00. The good news is that my employer will purchase my house at fair market value which is probably $70,000.00 or $80,000.00 upside. When I purchased my house I utilized the 10/10/80. I believe the pay off from eployer will cover the 80% and I would then loose my 10% down payent. However I would like convert the remaining 10% 2nd mortgage from a different bank to personal loan. I have never been late with any bill.
15. Posted by Bill on Tuesday 3rd November 2009 11:00
I don't know what your question is. If you are looking for a personal you may want to contact your local bank and ask them if they will lend you the amount you are looking for so you can payoff your second mortgage, if that is what you want to do. Again, I don't know what you are trying to ask, or if you are trying to ask a question.