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What to Do before Foreclosing on or Short Selling Your Underwater Mortgage

Guest post by: Bud Gragg

Article Overview: If you have decided to foreclose on your underwater mortgage, congratulations! We know what a hard step this is to take, and we admire your courage in putting yourself and your family first. With everyone from the government to pundits telling us we should hold ourselves to different, higher standards than the banks and lenders do, it can be really hard to see the trees for the forest, can't it?

What to Do before Foreclosing on or Short Selling Your Underwater Mortgage

If you have decided to foreclose on your underwater mortgage, congratulations! We know what a hard step this is to take, and we admire your courage in putting yourself and your family first.

With everyone from the government to pundits telling us we should hold ourselves to different, higher standards than the banks and lenders do, it can be really hard to see the trees for the forest, can't it?

But you've made the decision, and in at most a few years, you won't even have a concern about your underwater mortgage anymore. However, you need to do things correctly to prepare yourself for your foreclosure and for life after this mortgage.

First—before you miss a payment do a financial assessment. Are you going to need a new car in the next 5 years? If you buy it now, you'll save yourself a lot of money in higher interest payments later. Also, do what you need to do to make sure you'll be able to stay on time with all of your other bills after you stop paying your mortgage.

This will make it easier for you to get credit after your mortgage is foreclosed on, or you short sell your home.

Next, we'd like you to consider taking the lead in this process and doing everything you can to arrange a good short sale for yourself. Hire a sharp Realtor who knows the short-sale process inside and out to negotiate with your lender and to list your house for you.

Now, whatever you do, don't trust your lender's word! Make sure you get the agreement to accept a short sale from your lender in writing. This is where your Realtor is really going to be helpful. Remember that these are financial institutions you’re dealing with—and we all know we can't trust a single one of them, especially the large national banks.

Regardless of what your lender says, have your Realtor research what your house is actually worth and then list it with them for the short sale. Your mortgage lender will just sell it for pennies on the dollar—if they do that, they may have an actual incentive to come after you later. By taking the reins in the short-sale process, you get to protect yourself. And whatever you do, don't let your lender pick the Realtor you use!

Don’t fret over finding the right Realtor either. Feel free to contact us and we’ll help you find an educated, certified short sale Realtor in your area.

In addition, short sales are not short. Given the housing market, putting your house up for short sale just gives you more time to live in your house without making payments so you can start planning for your future.

You may also want to apply for a mortgage modification, instead of listing your home as a short sale. Now, two out of the three available modifications will actually cost you more money in the long run, and one of them is only going to help you if you're not in an adjustable-rate mortgage (ARM). Oh—and less than 3% of families are approved for them. But when you apply for a modification, everything stops until you get an answer from the bank that you are either approved or not for your loan modification. This gives you even more time in your house, mortgage-payment free!

But here's the most important thing we can tell you about dealing with your underwater mortgage—remember that your family is more important than your house and all of your possessions combined. Don't let any mortgage lender, any government official, or any blow-hard pundit tell you otherwise!

Related Articles
  The Underwater Mortgage: What to Expect in Pre-Foreclosure-and Beyond
  Your Life or Your House: Key Questions to Ask Yourself If You’re Facing an Underwater Mortgage
  Rebuilding Your Credit after Foreclosure on an Underwater Mortgage
  Don’t Be Fooled Again-Avoid Underwater Mortgage Advice Scams
  Dealing with the Bank on Your Underwater Mortgage Short Sale
  Where to Look for Help for Your Underwater Mortgage
  Underwater Mortgages: The Inside Story
  How to do a Short Sale on Your Underwater Mortgage and Avoid Foreclosure
  More People Walking Away from Underwater Mortgages
  Need Underwater Mortgage Help? Here’s Where to Turn
  Short Sale? Foreclosure? Options for the Underwater Mortgage Holder
  Underwater Mortgage Solutions: What Is a Short Sale?
  Home Short Sales: What They Are, How They Can Help
  Short Sale Training Boot Camp for the Underwater Mortgage Homeowner
  The Most Common Underwater Mortgage Mistakes-And How to Avoid Them
  Underwater Mortgage Loan Modification: Just a Band-Aid?
  Coming Soon to Your Neighborhood: Falling Home Values Mean More Underwater Mortgages
  LTV: The Key to the Underwater Mortgage
  How Long Can I Stay in My House and Other Underwater Mortgage Questions Answered
  Underwater Mortgage? Here’s What to Do

Article Tags: bank short sale, home short sales, house short sale, how to do a short sale, how to short sale, mortgage short sale, short sale, short sale definition, short sale foreclosure, short sale help, short sale information, short sale process, short sale training, what is short sale
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