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Home Renters Beware: The Foreclosure Crisis Affects You as WellAugust 11, 2008
Home foreclosures have created an overlooked victim: what happens when the home you rent goes into foreclosure? The vicious circle of declining home values and rising foreclosures.
July 11, 2008
Home values drop when foreclosures rise creating a vicious circle. Is there help in sight or a way to take advantage of a declining market? Home Selling Success: What You Need to Know
July 11, 2008
Yes, the home selling market has slowed in the past year; however, houses are still being purchased on a daily basis. What is the secret to successful home selling? Home Worth and Your Mortgage
By Karen LawsonHome Worth Columnist
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You bought your home with a low down payment and low initial payments. If property values in your area decline, you may find that you're "upside down" with your mortgage loan and your home value. This means that your home is worth less than your mortgage balance. Although disturbing, this may not be a significant issue if you're planning to stay in your home. If you want to sell, you may need assistance from your mortgage lender. Here are some ideas for addressing a negative equity situation.
Planning Ahead: Refinancing Can Help Preserve Home Equity
If your home value is already less than your mortgage, you have no home equity. Ask your lender about refinancing to a fixed rate as a way to minimize losses associated with negative home equity. If you do have some home equity, but are aware that home values are static or declining in your area, you may qualify for conventional refinancing to a fixed rate. Although your payments may be more, you'll be paying more toward your mortgage balance each month. Unlike "exotic" home loans that can cause your mortgage balance to increase when unpaid interest is added to the mortgage balance, the balance of a fixed rate mortgage decreases with each payment.
Declining Home Worth: Working with Your Mortgage Lender
You want to list your home for sale, but have learned that your home value is less than the amount needed to satisfy your mortgage loan. Call your mortgage company and explain your situation. They may be willing to accept a short payoff or pre-foreclosure sale. This means that they agree to accept the proceeds of a market value offer to pay off your mortgage. Mortgage companies make these decisions on a case-by-case basis. Cooperating with your lender can help you resolve negative home worth.
About the Author
Karen Lawson is a freelance writer with extensive experience in mortgage banking. She holds BA and MA degrees in English from the University of Nevada, Reno.