My Home Is Worth Less Than My Mortgage! What Can I Do?

My Home Is Worth Less Than My Mortgage! What Can I Do?

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Hundreds of thousands if not millions of current homeowners are having to face this unfortunate fact in the current depressed housing market. It is mostly a result of either a "no money down" home purchase or tapping that 'ever-growing' equity with some form of 100% home financing. Worse yet are homeowners where there is an ominous ARM adjustment in the next year or two. The homeowner had planned to refi or sell before mortgage interest rates adjust higher but can't in the current market.

For homeowners that have a fixed rate, it's just a matter of holding on until home values go up. In many, if not most homes this has historically been the case. If you stay in one house long enough the value will eventually go back up. Unfortunately, in very localized areas where the economy has gone down the toilet homeowners are getting a double whammy.

So what can a homeowner do? There actually are a number of things that can be done. We will cover them in two parts. Part 1 is related to related to financing and Part 2 involves the home itself.

1. Financing related actions:
a. For those that acquired a sub-prime mortgage due to credit problems, begin a full court press on improving your credit scores. This is a very broad subject to cover here but the key is you must start TODAY! There are a number of services and books out there that can help. If you are not sure where to turn, go to our website in the upper part of the home page above my toll free number and click on the link for Guaranteed help.
b. If you had to get a stated income or No Doc sub-prime or "Alt A" mortgage due to income that is difficult to document, you need to talk with your CPA or accountant. If you are using aggressive tax tactics to shelter some income you may need to need reconsider, especially if the benefit was a one-time tax reduction. Remember, you are paying a higher interest rate for these type loans for as much as 40 years. You could even file an amended tax return for the prior year or two. Work with both your accountant and mortgage professional together to analyze your options. Your goal is to have just enough documentable income to qualify for a conforming mortgage, which will have a lower interest rate throughout the life of the loan.
c. Another thing you could do is pay off some debt or sell a car to get rid of a car payment. If you have to replace it, buy a much cheaper car or let a non-borrowing spouse finance it so it doesn't hit your DTI.

2. Home related actions:
a. Get a new more current appraisal. The appraiser that did your previous appraisal may give you a price break. Pay close attention to negative adjustments between your home and the comparables. They should give you a starting point on what improvements you should make. Yes you may have to put more money in your home to significantly increase the value but you will do it on the absolute cheap (cheap price not cheap quality). Don't hesitate to pick up the phone and ask your appraiser what should be done. A good example would be to finish a basement or eliminate some condition items noted by the appraiser.
b. The single most important item most homeowners overlook is STREET APPEAL! At resale, it's everything. Cute houses resell better and faster in ALL markets. It can often get you an offer above the asking price.
c. The homeowner should do most of the work. If you use contractors, only use them for critical building code items like electrical, structural and some plumbing, otherwise you could make your situation worse.
d. Consult a realtor very familiar with your area about what buyers want and don't over improve for your neighborhood and if you need or want to sell, clean and depersonalize your structure. No clutter and empty looking closets, personal stuff and excessive furniture put away in storage, no wild colored paint or special paint treatment and nothing in disrepair!

There you have it. So stop being depressed and start taking action. A planned set of actions can cure the worst of anxieties. Good Luck!

About the Author:
Ron is a mortgage originator specializing in Alabama FHA mortgages. His website is full of Free information about the mortgage process along with mortgage terms and FAQs. Check it out at Alabama Mortgage Loan



Article Originally Published On: http://www.articlesnatch.com


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