Being Upside Down in your Mortgage is Not Fun!
Owning a home that is worth less than you paid for it is bad. Making matters worse you could have a mortgage that has a balance or a combined balance that is greater then the value of your home. 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 negative equity mortgage or an upside down mortgage don’t know what to do so often times, they do nothing. When looking for ways to handle these situations homeowners often start out looking for ways to reduce their mortgage balances. 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. If they continue to pay their [mortgage payments. Missing your [mortgage payments. You might be able to gain some leverage and get your lender to work with you. I am sure you heard that missing payments on your mortgage is the only way to get your lender to work with you. If you want leverage, miss some mortgage payments.
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. The second mortgage is more prone to risk and exposure if you were to foreclose on your property. Focusing your attention here could result in a settlement of the balance or a balance charge off which is a good thing. The charge off will require additional attention down the road as the account will turn into a collection account but you won’t have any further payments to that mortgage and the lien on your property will disappear.
When you look at refinancing an 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. If it is either Fannie Mae or Freddie Mac you could potentially have the ability to refinance. 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.
