Homeowners Who Cannot Sell
Since there are many people unemployed right now, many homeowners cannot keep up with their monthly mortgage payments. Some of them have low rates but, without employment, they still cannot keep up. Some homeowners have adjustable rate mortgages and find their home payments adjust to twice what they were paying. Many homeowners cannot afford to stay in their homes so they should sell and move on. The problem is that, with falling home prices, they also find themselves with upside down mortgages. That means, they owe the mortgage companies more than their homes are worth. So, what can they do?
The Problem of Selling
The first thing to do that comes to mind for many homeowners is to sell and move on. But, if they were to sell their homes, they are likely to get less for them than what they owe the lenders. Therefore, selling might not be the best option. However, it is a good idea to consult a Realtor to make absolutely certain that there is not a way to sell and walk away free and clear without having to come up with the rest of the money for the mortgage balance later on.
Choosing to Refinance
Often when you owe more than your home is worth, banks will not lend. However, there might be options that allow you to refinance your house or modify your loan since the rates are very low right now. If you have good credit and want to explore the option of refinancing or have any home loan questions, call your mortgage company as well as other banks for comparison. Sometimes, your own mortgage company cannot help you but other banks may be able to.
Mortgage Forgiveness and Foreclosure
Many homeowners cannot sell their homes, cannot refinance and cannot modify their loans. Then their mortgage companies try to foreclose on them. Foreclosure severely hurt your credit so it is wise to call your bank and try to negotiate with them before they foreclose. If they do go ahead with foreclosure, however, there is the new Mortgage Forgiveness Debt Relief Act of 2007 that will work on your side. This Act allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
