Tips for the Upside-Down Homeowner
Are you concerned that you or someone you know may be upside-down with your home's value versus your mortgage balance? Many people are battling this problem with their homes. There are plenty of tips and options that may help you financially and emotionally as you go through this trying time.
One of the easiest ways to see your way through this downturn is just to ride it out. If you have a job, are able to make your mortgage payments, and are able to wait out the current economic freefall, then why worry? The market will eventually turn around (just ask Warren Buffett); you just have to keep an eye on what is happening with the housing market in your neighborhood. As with any investment, the value of your home will rise and fall. Just look at your home as a long-term, rather than a short-term investment. Use this time to pay down the principal on your home, pay off those high-interest credit cards, or do some much-needed home improvements.
The second option is to sell your home. Preparation for selling your home is similar to any other home sale, but with empty pockets. Because selling your home could be a last resort, you have to remember to limit your emotional involvement. Bring in a friend to provide an unbiased perspective about what needs to be done to your "product" to make it appeal more to a buyer. Dealing with Realtors is much easier now because attitudes and risks have changed in this market. Just remember to do your research on the process of selling your home; this could save you a ton of money in the end.
Another option is to rent all or a portion of your home out. If you can find cheap rent somewhere else, maybe with relatives or in an apartment, renting your home to someone else could help you make ends meet on those mortgage payments. You may also be able to take some depreciation losses on your taxes to ease the pinch even more. Alternatively, you can rent out just a portion of your home. You might have a basement or garage apartment that you can rent out, while remaining in your house. You may have to make some small changes to your home to make it more renter-friendly, and you might want to study up on the implications of becoming a landlord.
These are all ideas to help you avoid foreclosure. Foreclosure is a black hole that keeps on draining you long after you've lost your house. If you find yourself falling behind on payments, call your lender immediately. They may have solutions to help you; they would rather work with you than see you walk away. Do not ignore correspondence; they may be trying to communication options to assist you! Make sure you know your rights when it comes to the foreclosure process. Read your mortgage and seek counseling. Learn about Hope Now, a program instituted by the Bush administration in 2007 to help homeowners avoid foreclosure.
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