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Short Sale? Foreclosure? Options for the Underwater Mortgage Holder

Guest post by: Bud Gragg

Article Overview: Given the housing market, we're not surprised if you've just found out you've got an underwater mortgage. Right now 24% of all homeowners are in the same boat as you, with one in ten of them owing 25% more than their homes are worth!

Short Sale? Foreclosure? Options for the Underwater Mortgage Holder

Given the housing market, we're not surprised if you've just found out you've got an underwater mortgage. Right now 24% of all homeowners are in the same boat as you, with one in ten of them owing 25% more than their homes are worth!

So what are your options when you're faced with an underwater mortgage? Let's take a look:

Staying in the house and paying off the mortgage. This could be a sound business decision under a limited set of circumstances: if the value of your house is only, say, 5% to 10% less than what you owe on your mortgage, or if you're close to having your mortgage paid off. And, of course, if you still have a job or business that lets you make the payments.

But don't count on property values going up a substantial amount any time soon.

Right now, banks have a record number of foreclosed properties—1.1 million—and that number isn't going to go down any time soon. It may well continue rising, and that means even more downward pressure on property values!

Loan modification. Don't get your hopes up about this one—less than 3% of homeowners qualify for a modification on their underwater mortgages. And two of the available modifications will lead you to paying even more on that mortgage!

Deed in lieu. In this case, you hand the keys to the bank. You move out immediately. Then the bank sells your house for pennies on the dollar and comes after you for the rest of the mortgage. This isn't an option—it's another trap!

Short sale. This is an option where you and your mortgage lender agree that the lender will accept being paid by a sale on your home that doesn't actually fully pay off the mortgage—called a “short” payoff. At worst, negotiating for a short sale gives you time to live in your house rent-free. At best, you can walk away from your underwater mortgage without having to take such a big hit on your credit rating!

Foreclosure. Don't be shocked—foreclosure is a legitimate option for dealing with your underwater mortgage! Think about it—do big businesses or banks themselves keep paying on an underwater mortgage when property values drop or when they've run into financial trouble? They do not. Go ahead and look it up.

And then be angry about how the financial services industry has sold everyone a bill of goods about how we should be playing by different rules than they play by when it comes to underwater mortgages!

Granted, Kristin and I aren't saying that anyone should let their morals sink to the level of your average CEO. But on the other hand, what higher moral principle is there than looking out for and protecting your own family?

Now, there are side effects to foreclosure. Your credit will take a hit, and in some states, your lender may try to milk you for the difference between what it sells your house for and the full value of the mortgage. The big banks are just starting to get aggressive about this in the past few months.

But you can easily ride out a few years of bad credit, and we can show you ways to protect yourself from a deficiency judgment!

The bottom line here is this—if you're dealing with an underwater mortgage, you do have options. A lot of them. Kristin and I have been through this, and we know what we're talking about. Use our website and our other materials, and we'll show you how to get out from under your underwater mortgage—and come out ahead.

Related Articles
  The Underwater Mortgage: What to Expect in Pre-Foreclosure-and Beyond
  Underwater Mortgage Solutions: What Is a Short Sale?
  How Long Can I Stay in My House and Other Underwater Mortgage Questions Answered
  Where to Look for Help for Your Underwater Mortgage
  How to do a Short Sale on Your Underwater Mortgage and Avoid Foreclosure
  Rebuilding Your Credit after Foreclosure on an Underwater Mortgage
  LTV: The Key to the Underwater Mortgage
  Deed in Lieu of Foreclosure - Might Be An Answer
  Don’t Be Fooled Again-Avoid Underwater Mortgage Advice Scams
  Dealing with the Bank on Your Underwater Mortgage Short Sale
  The Most Common Underwater Mortgage Mistakes-And How to Avoid Them
  Underwater Mortgage Loan Modification: Just a Band-Aid?
  Looking for a Simple Short Sale Definition? Here It Is!
  Need Underwater Mortgage Help? Here’s Where to Turn
  Save Our Home: Mortgage Help for Struggling Homeowners
  Underwater Mortgage Foreclosure Options- Yes, You Have Them and Here’s What They Are
  Don’t Look Back and Other Tips for Life after Foreclosure
  Underwater Mortgages: The Inside Story
  Pre-foreclosure and You: Making Lemonade out of Lemons
  What to Do before Foreclosing on or Short Selling Your Underwater Mortgage

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Referred by: http://www.meetkarennewman.com/



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