It has been estimated that anywhere between 10 and 25 percent of all homeowners are currently underwater on their homes. This data means a significant portion of Americans owe more on their homes than they could sell them for. If this situation sounds familiar, you’re probably wondering what your options are. Here are five ways to deal with your upside-down property.
1. Just live with it.
Just because your property is not worth what you paid for it doesn’t mean you’re in immediate financial danger. If you can make the payments and you’re happy with the house, don’t change anything. Eventually, you’ll have enough of the loan paid down that you could sell the house for less than you owe, or, it’s possible the value of the home will start to go up as the economy improves.
2. Rent it out.
If you need to move, look at the rental market in your area. Many areas with the largest drops in home value are the same areas with the most demand for rental units. You could rent out the house for what you owe every month, plus a little extra. You may consider getting a real estate management, such as Real Estate Management Los Angeles, to help you especially if you are moving across the country.
3. Get a loan modification.
Refinancing isn’t really an option, but there are several bank programs with the power to lower your interest rates and reduce your monthly payments. This adjustment will help you save a lot of money on interest charges, and make it possible for you to stay in your home or rent it out for a profit.
4. Short sale.
If you have to move and the first three options won’t work, it might be time to consider selling the home for less than it’s worth. By choosing this option, you’ll agree to give the bank the deed to your home, but you will not be responsible for the difference between what you owe and for how much the home sells. You may also have some negative effects on your credit score, but they typically only last a few years.
If your bank refuses to do a short sale, it only makes sense to look into the effects of a foreclosure. Under this option, you could potentially live in the home without making payments for over a year, but it is important to make sure that you have a plan to move out quickly once all the paperwork goes through.
Carnival of MoneyPros at Thirty Six Months
Carn. of Financial Camaraderie at Mo’ Money Mo’ Houses
Yakezie Carnival at Making Sense of Cents
Carnival of Retirement at Mo’ Money Mo’ Houses
Finance Carn. for Young Adults at Finance Inspired