Stuck Upside Down? Owe more than your Home is Worth?

  Wondering what to do?

Owe more on the mortgage than your home is worth?

Looking for options and nobody has the answers?

Americans owe more on their mortgages than their homes are worth.  In many cases this means they are simply stuck!

They can't sell and they can't move.  So how do you solve an upside down mortgage?

You and millions of others are asking the same thing.

First not all home values have gone down.  We have areas within our local market that have seen increases in sell prices and others where the prices have stayed level.

Many times the values and the mortgage payoff have become out of balance because of a low down payment.  This simply means the home value dropped faster than the principle on the mortgage.

The other cause for homeowners to have a problem is simple they took out a second mortgage and expect the buyer to pay more to make up for the cash they already took out of the home.  The first mortgage combined with the second increase the debt on the property above the actual selling value.

Knowing that you have taken your cash out in advance should be a tip that you won't get more because you owe more.

If you are the buyer you won't pay more because a seller owes more.  It would great if it worked that way but no reasonable person can expect that to happen.  It would be like playing the lottery and winning every time you bought a ticket!

So....what can you do to sell when you are upside down?  Several things are possible and all of them need your lenders help.

1. You can sell and transfer the second to your new home if the value warrants the debt load and you can get a loan for the new purchase price of the new home. 
2. You can sell and consolidate the second into your new mortgage to have a single payment on the new home.
3. You can sell with a lease option.

Most mortgages that are in existence today will not let you sell on a land contract without tripping a clause in the mortgage called the "Due on Sale" clause.  Simply put the lender does not want you to sell without paying them off!  A land contract is a sale. 

You have options then again maybe you don't but if you have taken out a second mortgage or a line of credit against your home you have removed your cash or profit in advance.  Don't expect a buyer to pay extra because you owe more.  You wouldn't and they won't either.

Need help?  email garywhite@flexitrealty.com