3 Options If You Are Underwater On Your Mortgage

If you currently owe more on your house than what it is worth, you are in a position that is called being underwater on your mortgage. If you really cannot afford to stay living in your house, you may wonder what your best option would be to get rid of it. If you sell it for what it is worth, you may need to bring a check with you to your house closing, and this is never a pleasant situation to be in. Here are several options you might want to consider using if you are in this position.

Let it foreclose

One of the easiest ways to get out of a house with an underwater mortgage is letting the bank foreclose on it. If you do not have any equity in the house, you will not lose any money; however, this will harm your credit and leave you without a place to live. In addition, some states allow lenders to go after the deficit that remains after a foreclosure. A deficit refers to the amount of money the bank lost from selling it for a price that was less than the amount you owed. For example, the deficit would be $20,000 if you owed $170,000 on the house and the bank sold it for $150,000.

Ask your lender for a loan modification

A second option you have is to talk to your lender about modifying your home loan. Through a home modification, you might be able to get lower mortgage payments or an extension of time on your loan. The lender might also be willing to forgive some of the late payments and fees on your mortgage, and other lenders might even drop the principle balance a little to help borrowers that are in situations like this.

Use a short sale

Another option would be to sell it through a short sale. A short sale is an agreement you can make with your lender to sell the house for less than what you owe on it. A short sale will typically not harm your credit like a foreclosure will; however, you might still be responsible for paying the deficit on the transaction.

If you are interested in this option, you would need to gain approval from your lender first and then hire a real estate agency for help finding a buyer for the house.

If you decide that selling your house would be the best option for your situation, you should talk to an experienced real estate business such as Cudd Realty to find out more information about this.