Lately, I've have been approached by many people who ask me for help because they are now upside down in their mortgage. They owe more money than their house is worth and don't know what they can do. The obvious question is what did you do to get in this position?
For some, they just got caught up in the interest only loan rate increases, property tax increase and the recent price drop from the slow market. For others, they bought at the wrong time, took advantage of 100% financing on overvalued properties and others refinanced to pull out equity from their homes and are now stuck.
Whatever your reason is that you are upside down, there are ways to help your situation such as:
1. Contact your lender to see if they can work out a new payment plan, reduced payments that will allow you to stay in your home until things can get better.
2. Tell them your situation and see if they can refinance your current mortgage (provided you have equity and can afford the new payments).
3. Ask to speak with their loss mitigation department and tell them your hardship situation (loss of job, medical problems, payments have doubled due to insurance/taxes etc. ) and ask them if they will work with you on a short sale. Sometimes they will work with you without being behind on payments, other times they will require you to be a few months behind before they will even speak with you. Ask them!
4. If you are nervous about speaking with the bank, contact a realtor who is familiar with the short sale process to have them negotiate on your behalf. It will cost you nothing to at least get the advice. A good realtor will be able to negotiate for you, list and sell your home and find you a new place to live.
5. The worst thing you can do is nothing. Foreclosure is the worst option. it's better to have a few late payments on your credit than a foreclosure that can stay on your credit for 7-10 years.
My advice is to contact someone who is experienced and can help. With millions of people facing foreclosure this year, you are not alone. Banks are overwhelmed with people in this same exact situation. They don't want your home, they want their money so that they can lend more of it to other consumers. The more BAD DEBT they have, the less MONEY they can borrow from the federal government and in turn the less money they can earn in interest.
Hope this helps you if you are in trouble.