Thread: What is the best advice you give homeowners who are upside down with their mortgage?

I would have them try and do a short sale. It can be a long process and stressful for everybody, but it can stop foreclosure and save the home owners credit. If you need to know how to get it started pm me.

May be an alternative payment plan might work initailly but when the payment become topsy turvy it is really difficult for the owners to negotiate this with any lenders,I also suggest a shot sale if things are going out of the hand.

How you should react depends on how bad is the current situation of your loan. If the value of your home has not yet sunk to the deep end you can talk to your lender about any loan modification or refinancing that they can provide. However, if the value of the house is way below their accepted terms, a short sale might be in order, this is much better than walking away from your house.

In any case you need help. The best variant is to rearrange the payments. It's very possible to do like this and I know that many do like this.

Google "Making Home Affordable" and you will get more info. If your loan is a Fannie Mae / Freddie Mac you might get a loan modification that will match your income. 31% of your income will be for housing. Depending on what your house loan amount is and 31% of your income you could receive a loan as low as 2% interest. Normally over a five year period the interest rate starts low and will increase to the going rate at the time of your loan modification. Also I have seen some that if you keep up with your payment in the five years you will receive an additional 10k off the loan balance.

Tip: Your loan servicing company has to do all the paper work for this loan modification government program and I'm pretty sure they don't get paid for the effort. Using the free credit counseling service provided in the Making Homes Affordable might be a good help to keep pressure on the loan servicing company. I have seen people get rejected twice so they call the attorney general which pushed the loan servicing company to completely fill out the paper work and then the third time they got approved.

There are a few options: 1) Chapter 13 BK, 2) Advertise for a roommate, 3) Talk to your lender and see if something can be worked out.

I suspect the option selected depends on how badly they're 'upside-down'. I mean, if it's not much I can't see why the bank wouldn't negotiate.

But if it's really bad, is there an option of just handing the bank the keys?

The new mortgage principle say that you can buy a new quarters and keep the old one but to make the grade for a new residence there are some new strategy
1. If you are Upside Down in your mortgage then you would have to qualify using equally house payments, the new house and the old house together. Simply stated, you need to qualify with two house payments.
2. If you have impartiality in your home it would need to equal 20% equity or more in order to use 65% of the rent on the old property. Most people wouldn't walk away from a home with equity so this stands as a pretty straight forward.

I would suggest that they look for some expert that have wide knowledge about refinancing and how to manage their mortgages. There are some techniques that can lighten the weight they carries on their mortgage.