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Blog Financing A Home Manage an Upside Down Mortgage
Manage an Upside Down Mortgage
Financing A Home
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Negative equity is often the direct result of a drop in real estate prices. Those who find themselves in an upside down mortgage will certainly not be pleased, and will want to take action to change this. A negative equity situation can cause financial problems, cause credit scores to plummet, and reduce the ability to seek new loans. The current economy has landed more than 20% of homeowners in this exact situation.
underwater-mortgageTrying to keep your head above water?Immediate action will be required in order to get yourself out of this situation. Though it may go against all that you know and believe, it is advisable to stop paying your monthly mortgage payments. This will help you save as much money as possible. The money you save now can be used at a later point to purchase a new home which will get you out of the current upside down mortgage situation.
 
Get prepared to do battle with the mortgage company by hiring an attorney. You do have certain rights, and these need to be protected. The sooner you seek counsel, the better prepared you will be. You will likely start to receive frightening notices soon after you stop making payments. However, in most cases you will have six months before actual eviction notices start to arrive. During this time frame you will need to focus on saving as much money as possible so that you can afford a new residence.
 
The mortgage company may start to offer you lower monthly payments or other concessions aimed at getting you to stay in the mortgage. This is done in order to avoid taking a loss on the home. Lower payments may certainly be enticing, but they will do little to get you out of the underwater mortgage situation. Deals may also force you to spend the money you have been saving, at which point you will be left with nothing to spend should you have to move anyway.
 
Once you realize that a move is inevitable, consider starting to clear the home of excess items. Selling items that you do not need will help you add to the amount of money you have saved. Most evictions lead to downsizing, with homeowners often moving into an apartment until they can find another home. Be mindful of this, as an apartment will likely not hold as much as a home. Letting go of certain items may be hard, but you could opt to only sell what you can re-purchase again at a later time.
 
The only other option may be to try to sell the home and use the proceeds to pay off the remainder owned on the loan. This will only work if you are able to sell the home for more than the amount owed. This may be an option if you only owe a few more years worth of payments. This may allow you to generate additional income for moving into an apartment or purchasing your next home.

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Darin Redding
Written on Monday, 22 March 2010 08:11 by Darin Redding

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Last Updated on Monday, 21 May 2012 17:11
 

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