What To Do If You Are "Upside Down" On Your Mortgage
Today, many people are finding that they owe more on their home than it is worth. If you don't have an immediate need to sell, that's okay, it's really just a paper loss. When the market turns around, (which it will, it's just a matter of when) you will begin to regain equity. It is really no different than the stock market. Unless you were planning to sell your stock when the market goes down, you are only suffering a paper loss.
That being said, there are many people who are panicing and making the decision to walk away from their homes. That is not the right thing to do, in the long run these people are doing themselves more harm than good. I have acutally had people say to me that they can't believe they have to pay this mortgage when their home isn't worth that anymore. Think about that statement. I would ask these people if when the home doubled in value from their mortgage amount, were they willing to give the bank part of that equity?
The fact of the matter is, when we as consumers take out a mortgage, we have signed a promise to pay back the amount we borrowed. If we don't, the bank can take back the home which was the collateral on that loan. This has nothing to do with home values. Most people understand this, so they remain in their homes perhaps a little longer than they had originally planned, but what choice do they have.
On the other hand, there are some people who HAVE to sell. These are the people who find themselves in a horrible situation. Some of the reasons that a person may HAVE to sell are - death of a spouse, loss of a job, serious health problems that keep them from being able to work, employment transfer out of the area, serice men and women who have had extended deployment just to name a few. These people have had a severe change in their financial circumstances since they first took out their mortgage. These people, if they were to apply for that same loan today would be denied. In other words, these people have a new financial hardship that is making it impossible for them to keep current on their mortgage payments. These are the people who most likely won't qualify for a loan modification either. These are the people that we try to help sell their home as a short sale.
A short sale is a situation in which you put your home on the market for as close to market value as the home will bear. Once an offer is accepted, it is submitted to the bank, along with a full list of documents that must be provided as evidence of the change in financial circumstance. We handle submitting all the documents to the loss mitigators at the bank. Once we are assigned a negotiator, we begin negotiating with them to accept less than owed as final payment.
In essence, we are taking the burden off the shoulders of the homeowner and taking care of the details on their behalf.
If you or someone you know may need help applying for a loan modification program through their lender, or may have the need to sell their home as a short sale, or just have some questions, please have them contact Lynn or Jay at 623-238-3875.
