So many homeowners find themselves in a really bad position when the economy is in a downturn. They’re underwater on their mortgages – meaning that they owe more on their home than it is worth at a current valuation. When this happens and you need help, there are some resources that you can turn to.
The Good
The good news is, you may have some great options depending on how far into the situation you are. If you wish to keep your home, the first thing you should do is call your lender and find out about potential refinancing options that might be available to you. Using this method, you can get a more manageable payment or get a bigger “shovel” to dig yourself out of your mortgage debt more quickly to get your mortgage amount below the house’s current valuation.
If you don’t wish to stay in your home, but don’t want to take a major hit in the open market, you can reach out to a real estate investment firm. These experts can help you properly value and prepare your home and will pay you 100% cash to purchase your home. You can then take this cash to the bank, pay off your mortgage loan in full, and walk away from the poor situation.
The Bad
The bad news is that if neither of these methods works for you, you may be forced to take uglier steps. The most desirable result of the two is that the bank allows you to sell your home on a short sale, finding a buyer who will purchase your home at its current value and you will pay the difference.
If you can’t afford to pay the difference, you will instead be foreclosed on by your lender. Either a short sale or foreclosure will damage your credit significantly, so these should only be last-resort options.
The Ugly
The worst thing that can happen is that you wait too long to reach out to your lender or an investor and you dig yourself into such a deep hole that you’re forced to file for bankruptcy. Don’t let yourself get to this point. If you’re in a situation like this, contact your lender today and find out what your options are!