When your home is underwater, you owe more on your home than what it’s worth. It’s a stressful situationand can put you in an uncomfortable position both financially and emotionally. But it’s not the end of the line. Continue reading to find out what you can do about an underwater mortgage.
What Is an Underwater Mortgage?
An underwater mortgage is a mortgage loan where the outstanding amount is more than the property’s current value.
Let’s say you purchased your home a couple of years ago, and you owe $300,000 to the bank. However, property values have depreciated in your neighborhood, and your home is now only worth $250,000. Since you owe more than the value of your property, it’s termed an underwater or upside-down mortgage.
What Can I Do If My House Is Underwater?
We’ll walk you through the options you have toanalyze the pros and cons of each scenario and choose the best one that works for you:
Stay in Your Home and Try to Build More Equity
There’s no sugarcoating it, but this method is hard work. You might need to take another job, reduce your expenses, stop using credit cards, and work hard to pay off the mortgage. It might take years, but it’s worth it. Once you’ve paid down more of your principal, you can see your mortgage significantly drop. The more money you can save to pay down the principal, the faster you can build equity on your home, and the quicker you can be free of your mortgage debts.
Check If You Qualify for the HARP Program
The HARP program was created after the housing crisis of 2008, and it helps homeowners refinance upside-down mortgages. To qualify for this program, you have to have made regular mortgage payments for the last six months. Also, your loan must have originated before May 31, 2009.
Sell Your House and Use Your Savings to Pay the Balance You Owe
Generally, it’s still the best option to stay in your home. However, if you no longer want to reside in your home or looking to relocate elsewhere, the best option is to sell your house.
Reach out to top-rated cash home buyers in Atlanta, GA, for a quick sale.A cash buyer assesses your house and provides you with a fair quote based on the property’s current market value and condition. However, you will likely have to pay the rest of the mortgage out of your pocket to the lender.
Weigh All Your Options and Make the Best Choice
Besides the three options listed here, you can also consider other options like a short sale, foreclosure, or declaring bankruptcy. Remember that those options will most likely cause you to lose the house.
Knowing your home is underwater can be stressful. It may feel like you’re drowning under the weight of multiple mortgage payments, but you can get through this challenging phase. Reach out to trusted professionals to help you out.
At Barrington Home Buyers, we buy houses in Atlanta, GA, in any condition, irrespective of your financial situation. Reach out to us to get a free cash offer on your home today!