Underwater mortgage what do you do with a situation like this?

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I have a mortgage that is 82,000, with the 6 foreclosures on my street my home is now worth 39,500– What in the world does someone do in this situation. The home I purchased WAS in a great area, 1 yr after purchase the town built 2 section 8 apt complexes, closed down the school district to the south and sent them all to this district. In other words I bought the house in 1999 and in 10 yrs the city went to the dogs. Now what are my options- I dont want to rent the house (that is a sheer headache), I had a loan modification (to avoid foreclosure)done last yr @ 4% interest but that resets to 8.5% next June and I do not want to pay that. What the heck is to be done here any one have an idea– I know I am not the only one in this boat. Thank you for your help.


  1. Reply
    May 17, 2011 at 7:24 am

    Consider yourself a business enterprise. Consider the house as one aspect of the business.

    Now, what would you do?

  2. Reply
    May 17, 2011 at 7:46 am

    That so called loan modification,will you screwed your self. I know you don’t need to hear that. So ok here is what you do, only three choices.
    #1. Keep paying and when it resets pay the new amt..
    #2 sell and suffer the loss.
    #3 now re: renting it out. You may not like it but it could save your
    butt..first by it being a rental you can deduct for deprecation,this can be a huge benefit. Go to Craig’s list and realtor.com what is the rent for homes in your area. Would that pay the new mortgage,taxes and insurance,even if it’s a small negative it could still be a good deal,check with person that doe’s your taxes..now h&r block..
    Last could you refinance at a fixed rate. Their are some great deals out their.. I hoped i helped you.. Good luck..p.s. i am a land lord,i own a lot of houses and i am always dealing with issues like yours..so that is where my advise comes from..

  3. Reply
    MM C
    May 17, 2011 at 8:24 am

    The value of the house will only affect you when you have to sell it or refinance it. Your mortgage is 82k and value has drop down to 39k so refinance may not be a choice for you. If you can keep up the payment @4%, it may be a good way to go and wait until next year to see how the market will be before you decide your next step. Renting out the house is another good choice but make sure the rent can cover the payment. Or just rent out one or two rooms so you still can live in the house.

    Don’t just focus on the value of the house if you can afford the mortgage payment. Try your best to keep your income stable and budget up your expenses so you won’t have to risk in foreclosure.

  4. Reply
    May 17, 2011 at 9:05 am

    Can you do a re-fi and lock in? Right now interest rates are below 5%.

    If you owe more than the house is worth – it’s not a problem as long as you are not selling. The housing market will turn around. So if you can re-fi and lock in at a lower interest rate I’d do it. Then stay in the house another 5 years. By that time, the market should have turned around and the value of the home come back up. You could sell then if that’s your goal.

    **not legal advice or professional advice, just my opinion.

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