Honest Realestate Agent

Posts Tagged ‘upside down mortgage’

Its bad if you own a house that is not worth what you paid for it. A mortgage with a combined balance or individual balance that is greater than the value of your home only makes matters worse.  If this is the case then you have a negative equity mortgage or an upside down mortgage, whichever you prefer.

Most people who have a mortgage with negative equity or an upside down mortgage don’t know what to do so often times, they do nothing. If you are looking for ways to reduce your mortgage balance be prepared for some heartache, it’s not going to happen easily.  I wish I could tell you that there is an easy way to do that but there isn’t.

Balance reduction requires leverage and one of the only leverages pieces that homeowners have is the payment they pay to their lender. continue] to make your [mortgage payment. payments] could be an option, but explore this area carefully. Get your lender to work with you and gain some leverage.  This is why you hear from many different sources that missing your payments is the only way to get your lender to work with you.  Missing payments equals gaining leverage.

Now I can’t tell you to miss your mortgage payment but if you decide to do so you are heading down a path where you begin walking that fine line between foreclosure and homeownership.  You just need to know that there is a chance you could lose your home if you can’t generate the desired leverage.

The best chance you have at getting your lender to work with you is to have two mortgages. If you are headed to a foreclosure on your home the second mortgage company is in a bad position. Settlement of your balance is the outcome here if you focus your attention in this area and that is a very good thing. Good news is the lien will disappear but when you charge off the balance it will end up as a collection account in the end.

When you look at refinancing your upside down mortgage you need to look only at the first mortgage only. Look at who insures your loan and who services it, typically who you make your payments to. It is possible to refinance if you have a Fannie Mae or Freddie Mac mortgage. There is a very good opportunity to reduce your rate or change your mortgage terms but beware there are additional guidelines and criteria that need to be met.

If you think you can refinance and are facing foreclosure due to your negative equity in your home, think again, there might be hope just yet.  There is a government sponsored program called Making Homes Affordable that was set up to help struggling Fannie Mae and Freddie Mac. In order to help those who had a negative equity position in their home the program changed the guidelines to allow for mortgage refinances.

Fannie Mae and Freddie Mace were struggling if you didn’t know.  They insure mortgages and when the real estate market fell apart they really struggled.  This program has really allowed them to get back on their feet and now it’s the homeowners out there who need an upside down mortgage refinance that need to take action.

If you were one of the unlucky people who refinanced for cash out of your property, purchased a new home or took out a line of credit in the past few years then odds are you have negative equity. This means you home is currently worth less than you owe on your mortgage.  You might have taken out an adjustable rate mortgage and its about to adjust and a refinance could really help you keep the payments down. With interest rates on mortgage near the 5% range refinancing is very important to many homeowners.

If your current home has negative equity then look for a refinance? Well you might be in luck and get the government’s Making Homes Affordable program to work for you.

Here are some basic rules to negative equity mortgage refinances:

1. You can only have a loan-to-value of 125% max.

2. Depending on your circumstances you may have to qualify with your existing lender.

3. If you have two separate lenders the second mortgage company will have to subordinate, or allow the refinance to happen.

4. If you have mortgage insurance on your home mortgage then you may have an issue with the mortgage insurance company when you look for a refinance due to the negative equity.

5. Not all loans are serviced or insured by Fannie Mae or Freddie Mac so find use their loan look up features to determine your status.

Those top five reasons should be enough to make you dangerous when attempting to help with negative equity mortgage.  The process is not exactly easy these days but the outcome will be worth it to you once you see that your payment is lower and life is a little more manageable. You can make great things happen if you find a knowledgeable mortgage professional.

With the current real estate market, it is not a surprise that the foreclosure rate is up as high as 50% in some areas and states. There are many people who are having to face the upside down mortgage problem. The problem really began a few years ago when the there were many booming real estate markets including California, Nevada and Florida.

Many people convinced themselves that they could get into homes that were really beyond what they could afford and then wait for the property values to go up even more so that they can resell. Since there home values kept going up, there was no doubt in people’s minds that they would not make the money by selling these properties in the future. After all, all the home selling, buying and investing workshops had many investors who made lots of money this way.

The credit market added to the problem. As property values skyrocketed in many states and areas, there were a large number of banks that were willing to give money to people with bad credit providing they were going to purchase decent homes. Therefore, people who did not make a whole lot of money and did not have fair credit were able to buy expensive homes with loans that were too expensive in the long run. They did not care about the high interest rates because their home values kept rising more and more.

But soon enough the bubble burst and property values shot down significantly. The values kept falling as lenders realized that they made a mistake in lending to people who could not pay back. They started foreclosing. But, by then, the property values had fallen so far down that even when people wanted to sell their homes, they were not getting enough money back to repay their mortgages. The balances of their mortgages were much higher than the values of their properties. In another word, they have upside down mortgages. Foreclosing on these homes is not a solution for banks either since they are not going to get the amount owed by the homeowners back. For the people, even though, there are ways to delay foreclosure, when they are upside down on their home mortgages, they are going to have to lose their homes.

With the current housing market, it is no wonder that the foreclosure rate is up almost as high as 50% in some cities. There are many homeowners who are having to face the upside down mortgage problem. This problem really began a while ago when the there were many booming real estate markets including Florida, California, and Nevada.

People believed that they could buy homes that were really beyond their means and then wait for the home values to rise even higher so that they can resell. Since there property values kept going up, there was no risk that they would not make the cash by selling these houses at a later date. After all, all the home selling, buying and investing workshops had many people who made a large sum of money this way.

The credit market made the housing problem bigger. As property values skyrocketed in many states and areas, there were a large number of mortgage companies offering to lend to people with less than good credit providing they were buying good enough homes. Therefore, people who did not earn much money and did not have excellent credit were able to buy expensive homes with expensive loans. They did not care about the high interest rates because their property values kept rising.

But soon enough the bubble burst and home values fell down significantly. The values kept falling as lenders realized that they made a mistake in lending to people who could not pay back. They started foreclosing. But, by then, the property values had fallen so far that even when people wanted to sell their homes, they were not getting enough money back to repay their loans. Their mortgage balances were much higher than the values of their properties. In another word, they have upside down mortgages. Foreclosing on these homes is not a good solution for banks either since they are not going to get the amount that they were owed back. For the people, although, there are ways to delay foreclosure, when they are upside down on their home mortgages, they are going to have to move out of their homes.