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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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