Underwater Mortgage? There Are Solutions.

22 05 2011

Foreclosures and a rapid decline in home prices throughout the United States began in 2007 and continued through 2009, sending our country into an economic tailspin.  Today many Americans find they are upside down on their mortgage and their homes are worth far less than what theowe.  Experts estimate that 1 in 4 people are in this situation.  Should you find yourself in this situation, you can maneuver through the uncertain times by considering the following options.

First, talk to your lender.  In the wake of the foreclosure crisis, lenders are more willing to review the amount you owe and create plans to accommodate your ability to make monthly payments.  Lenders have been flooded with inventory and it’s in their best interest to make it easier for you to pay your mortgage, rather than take the home in a foreclosure and sell it for pennies on the dollar.  Be honest and express your need to reach an agreement that will help you to make your payment without defaulting.

Another viable option is renting your home.  As mortgage qualification requirements become more aggressive, people are finding it more difficult to purchase homes.  In lieu of buying, many Americans are deciding that it makes more sense to rent a home, so the number of prospective renters is growing every day.  Renting your home offers an alternative to selling or losing your home entirely and often the rent you receive will cover your monthly mortgage payment.  This will give you the opportunity to rent a less expensive home for yourself, make your monthly mortgage payments on the property you own and wait out the economic recovery.  The easiest way to handle your rental property is to hire a property management company who will facilitate the entire process – from screening applicants to handling maintenance and repair issues.

Short selling your home is the next best way to avoid foreclosure.  If you become unable to pay your monthly mortgage payment, investigate selling your home for less than what you owe.  A short sale is when the lender agrees to settle for less than what is owed on the mortgage.  This makes sense for the lender because it ensures they will receive an established sum of money vs seizing the home in a foreclosure and potentially selling if for much less.   Consider consulting a Realtor with experience in the short sale process, as they can offer distinct advantage in negotiating with your mortgage company.

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