Are you upside down in your mortgage? Here’s what you can do.

Homeowners who bought real estate in the '05-'06 boom, especially those who took out mortgages of near 100%, find themselves upside down with nowhere to turn.  With a mortgage of $400,000 and a current market value of $320,000, many are frantic to sell and get the load off their back.  But is selling the best answer for your situation?  Find your scenario and assess your options:

 SCENARIO 1:  We are staying to raise our family/retire here.

 If this is your situation, and your monthly payments are affordable for you, sitting tight may be the answer.  Values will climb upward again as time goes by, and when you eventually sell, you will probably have equity.  This may require a 2-5 year horizon, but if you love your community and have no financial or life pressures forcing you to move, it works for you.

 SCENARIO 2: Our mortgage will re-set next month to a higher interest rate.

In this situation, you need to be doing some serious number-crunching.  How much will your monthly payment increase?  Do you have the income to maintain that new payment long-term?  In some cases, you may be able to negotiate with your lender to keep that re-set from happening, but work it out before it's scheduled or before you miss a payment.  If the lender won't negotiate, selling may be the answer.  Selling for less than your mortgage payoff amount will require a short sale and the Lender's approval.  

SCENARIO 3:  We are already behind on our payments and we can't catch up.

Your situation is already desperate.  Call a Realtor to discuss selling your home ASAP.  This will be a short sale and you will need to give evidence to the Lender of the financial hardship which has caused you to fall behind.  You may also try negotiations with the Lender's Loss Mitigation department to keep the house, but do it now - don't wait another day. 

SCENARIO 4:  We have received a Notice of Default from the bank.

Your homeownership is hanging by a thread.  Waste no time - contact a Realtor who can explain the options of forbearance and short sale.  Time is crucial and every minute counts to prevent the pain of foreclosure.  The Notice of Default officially launches the foreclosure timetable, 90 days to auction/eviction in Arizona.  Act now to spare your family this tragedy.

Being upside-down in your mortgage can present special challenges, but your real estate professional can guide you to the best answer for your situation.  Contact Marsha Cleaveland at 623 337-8990 for your real estate needs.  Or visit www.homekey.org.