Due to the quick nature of the real estate market and other economic conditions, some may find they owe more on their home than what the property is actually worth. This can be problematic for a multitude of reasons.
When the value of your property falls, yet you still owe the balance of the original loan amount, this is called an underwater mortgage and is sometimes referred to as an upside-down mortgage.
Can you refinance if your house is underwater?
Many mortgage lenders require at least 20 percent equity to be built up before funds can be released, so if you have an underwater mortgage, you won’t be able to refinance the property.
However, if you have an existing mortgage loan that started prior to May 31, 2009, you may qualify for the HARP program which allows you to refinance your house regardless of it’s underwater status.
If you’d like to start fresh, you may consider selling your home, however you’ll need cash in hand to cover the difference still owed to your mortgage lender.
You may also consider speaking with your lender to conduct a short sell on your home. This would mean they would sell your house for less than what you currently owe, losing them money, so this isn’t the most ideal solution. It’s usually only agreed upon if it’s demonstrated you can no longer make mortgage payments on the property.
Being underwater on your mortgage may feel scary, however, working with your lender, you can map out the best solution to gain stability.
Nicki has a passion for building relationships and fostering community engagement, honored and enthusiastic about joining the MMFRE team. An Oakland County native, she, along with her three children, make Clarkston their home. Having an in-depth knowledge of the area and all the lakes have to offer, her insightfulness equates to rewards to all that are purchasing (and/or) selling their most valuable asset.
Armed with a Michigan State University (MSU) degree as well as 10 years of business experience in advertising and marketing, Nicki's "silver lining" shines through when it comes to showcasing properties for the "highest" and "best" results in this fast-paced, competitive industry.
She's "people person" at heart and enthusiastic about delivering results, you're sure to get to a successful finish line as my resourceful package of approachability, talent, resourcefulness, creativity, cheery attitude and honest hard work is yours for the asking.
