Tips for Avoiding Underwater Mortgage
Many families around the country are now struggling to make their
monthly home mortgage payments. Prolonged levels of unemployment as well as
other financial related pressures have forced many people to take a
closer look at the value they have in their homes as well as the balance
remaining on the mortgage. In many instances, homeowners are discovering
they actually owe more on their mortgage than their home is worth. This is
an underwater mortgage situation where the market value for the property has
dropped below the total of the current outstanding mortgage. This
problem can be even more challenging for homeowners who are not able to
pay the mortgage or who cannot realize enough profit from the sale of
their home in order to pay off the balance on the mortgage.
The housing market has been inundated with foreclosures over the course
of the last few years. Furthermore, the forecast for foreclosures
continues to appear grim until the economy rebounds. Taking a long hard
look at your current situation and taking quick, decisive action can
help you to take advantage of solutions that do exist.
A professional realtor can actually be of tremendous help if you find
that you are experiencing difficulty in making your monthly mortgage
payments. Through the assistance of a realtor you can determine the
current value of your home as well as possibly identify possible
programs that may be able to help you. If you have missed at least one
mortgage payment this is a good indication that it is time to reach out
for help before you find yourself at risk for losing your home.
It is also important to contact your lender. Your lender may be able to
modify your mortgage loan or offer the chance for you to refinance your
mortgage loan based on new conditions. The most important aspect of
making this work is ensuring that you have all of the necessary
documentation when you make the phone call.
You might also consider contacting a certified counseling. There are
multiple stages and notifications that are involved in foreclosure. If
you take action early enough, most of that can be avoided. Even if your
lender is not able to make adjustments to your mortgage, there may still
be some adjustments that you can make on your own in order to improve
your financial situation. A housing counselor that has been certified by
the U.S. Department of Housing and Urban Development can provide free
advice.
You might also consider HAMP or HARP. These two federal programs; Making
Home Affordable Again and Home Affordable Modification Program, are both
designed to assist homeowners who are facing the prospect of foreclosure
due to financial difficulties. HAMP is designed to evaluate your current
mortgage agreement and optimize your loan terms so that payments are
more affordable. HARP is designed for homeowners who are actually
current on their mortgage. HAMP is designed for homeowners who have
fallen behind or who are currently in default. Both programs encourage
lenders to extend loan terms from 30 to 40 years or decrease the
interest rate in order to lower monthly mortgage payments.
In some states, such as New Jersey, there are now programs available to
assist homeowners who are already involved in foreclosure proceedings.
This assistance takes the form of free counseling to help homeowners
review their financial status or provide attorneys who can assist in
reviewing legal documentation as well as negotiate or mediate between
homeowners and lenders in order to identify an agreeable solution.
In a truly dire situation, a viable option might also be a short sale. A
short sale occurs when a home is sold for less than the amount that is
needed to actually pay off the mortgage loan balance. A short sale makes
it possible for the homeowner to at least recover some of the home’s
value as well as keep some of their credit intact. This type of
transaction can be complicated; however, and not all banks are willing
to agree to a short sale. In addition, remember that even if the bank
does agree to a short sale, you may still be held responsible for the
difference between the final sales price of the home and the outstanding
balance on the mortgage loan.
Regardless of which option you choose, it is important to make sure that
you only work with a certified counselor, professional realtor or
legitimate government organization or entity. It is possible to overcome
financial difficulties, but that will only happen when you are working
with an experienced professional. Keep in mind that reputable companies
will not charge you for such services.
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