What if You Cannot Sell?
With many people unemployed in this economy, a lot of homeowners are unable to keep paying their mortgage payments. Some people have good, fixed rates but still, without regular income, they still cannot keep paying. Some homeowners have adjustable rate mortgages and find their home payments adjust to outrageously high amounts. Many homeowners cannot afford to stay in their homes so they have to sell and move on. However, with home prices falling sharply, they also find themselves with upside down mortgages. That means, they owe the banks more than their homes are worth. So, what are their options?
Should They Sell Their Homes?
The first thing to do that comes to mind for a lot of homeowners is to sell and move on. However, if they were to sell their homes, they are going to get less for them than what they owe the lenders. Therefore, selling may not be the most logical choice. However, it is often a good idea to talk to a real estate professional to make sure that there is not a way to sell and walk away free and clear without having to come up with the rest of the money for the mortgage balance later on.
Choosing to Refinance
Often when you owe more than your home is worth, mortgage companies do not want to lend. However, there could be options that allow you to refinance your home or modify your loan especially when the rates are extremely low right now. If you have good or fair credit and want to explore the option of refinancing or have any home loan questions, call your lender as well as other financial institutions for comparison. Sometimes, your own mortgage company might not help you but other banks may be able to.
The Result of Foreclosure
Many homeowners cannot sell their homes, cannot refinance and cannot modify their loans. Soon their mortgage companies file the foreclosure papers. Foreclosure severely hurt your credit so it is advisable to call your bank and try to negotiate with them before they foreclose. If they do foreclose, however, there is the Mortgage Forgiveness Debt Relief Act of 2007 that will work on your side. This Act allows taxpayers to exclude income from the discharge of debt on their principal residence. Debt reduced through mortgage restructuring, as well as mortgage debt forgiven in connection with a foreclosure, qualifies for the relief.
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Tags: debt relief, foreclosure, home loan questions, mortgage forgiveness debt relief act, mortgage relief, refinance, selling, selling a home, upside down mortgages
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