Being a proud owner of an underwater mortgage is a combination of bad timing and bad life choices. You probably put almost nothing down to begin with, decided to pay just the minimum monthly, and hoped for the house pricing to boom in your area — which never happened. The result: negative equity.
While you’re partly responsible why your home loan has submerged, your salvation may also be in your hands. The options may not be great, but it’s not yet time to raise the white flag and let foreclosure happen.
Here are the ways you can positively deal with it:
Have a Fresh Start
Refinancing offers the most desirable scenario for underwater homeowners. The government has laid out a variety of loans to rescue you, and even allow you to benefit from the lowest rates in the market.
For instance, if you have an existing government-backed mortgage in Utah, applying for an FHA streamline in Salt Lake City lets you start from scratch with a simplified process.
All refinancing options, however, have certain qualifications. Just make sure you pass every requirement, or find a way to meet the conditions ASAP to get you started sooner than later.
Get Some Breathing Room
Loan modification is another path underwater loan owner takes. Your lender may offer a program to lower your interest rate or your overall monthly payment either in the short term or for good. This process may be time-consuming and potentially hurt your credit score, but at least you get to work your way toward positive equity in the years ahead.
Sell the Property Short
If you’re feeling hopeless about your situation, one escape route is short sale. If your lender agrees to let you sell the property for less than what you owe and call it quits, that would be a huge relief. Make sure, however, to see a real estate lawyer to ensure the agreement would suffice to free yourself from any deficiency, and a tax professional to know if you owe the government anything.
According to City Creek Mortgage, finding yourself underwater is a tricky situation, but you’re not beyond saving. Assess your situation carefully, and come up with a solid long-term plan to decide the best option to pursue.