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"BEYOND PROMISES TO RESULTS"
DEALING WITH NEGATIVE EQUITY
Selling with Negative Equity or even at No-Equity can be
challenging and stressful. We often purchase
homes as an asset and safe way to build equity so selling at Negative Equity
stings! Negative equity occurs when you
bought when the market was up and then it dropped or can also occur if you need
to sell quickly after buying a home that you did not improve.
Here are some ideas on dealing with Negative Equity:
A short sale occurs when the bank allows
you to sell the home for less than you owe.
Short sales require the homeowner to apply for this right and it can be
a long tiresome process. The deficiency
balance is often reported to the credit agencies so be prepared for your credit
to take a hit.
2.Pay the Deficiency
Most people don’t really want to consider
this option but you could ultimately pay the bank at closing for the shorted
amount. This is more feasible if your
negative equity is a reasonable amount that won’t completely break your bank,
but some may even choose to take at a loan to pay the deficiency. Just depends how much you value selling the
house and protecting your credit rating.
Some people don’t feel an urgency to sell
due to financial hardship but rather the bottom fell out of the market and they
fell they have a bad loan. Some of these
people refuse to continue to pay towards a home that is valued significantly
less than their mortgage balance so they consciously keep their money and let
the bank foreclose. (This is not
advice. Simply what happens in the real
world). These people must prepare
themselves for the windstorm of issues that come along with foreclosure.
4.Forfeiture or Deed in Lieu
Deed in Lieu of Foreclosure means the
Seller amicably give the house back to the Lender to avoid both parties having
to suffer through the full foreclosure process.
This is still very bad for credit scores…only slightly better than a
A loan modification occurs when your Lender
agrees to adjust your mortgage so that it is more affordable for you. This isn’t a guaranteed strategy as it requires
approval from the bank. Also, there are
often some credit repercussions if you were delinquent on payments before requesting
the loan modification (which is the norm).
Yes, it makes the home more affordable but you will still have an
Call an agent (Me) and find out the going
rental rate in your area. You may be
able to lease your property and have someone else pay down your mortgage
balance while you wait for your home to appreciate. Just prepare yourself for life
as a Landlord…
7.Sell to an Investor
Investors buy homes quickly for all types of
reasons. Your house may be just what
they are looking for. If you are in the Greater Houston Area, give this company
If you need more info or help with an Upside-Down
Mortgage or have any other Real Estate Needs, give me a call or fill out the contact
form below. I would be happy to set a free, no-obligation Consultation
to see how we can work together to achieve your real estate goals.