Due to the quick nature of the real estate market and other economic conditions, some may find they owe more on their home than what the property is actually worth. This can be problematic for a multitude of reasons.
When the value of your property falls, yet you still owe the balance of the original loan amount, this is called an underwater mortgage and is sometimes referred to as an upside-down mortgage.
Can you refinance if your house is underwater?
Many mortgage lenders require at least 20 percent equity to be built up before funds can be released, so if you have an underwater mortgage, you won’t be able to refinance the property.
However, if you have an existing mortgage loan that started prior to May 31, 2009, you may qualify for the HARP program which allows you to refinance your house regardless of it’s underwater status.
If you’d like to start fresh, you may consider selling your home, however you’ll need cash in hand to cover the difference still owed to your mortgage lender.
You may also consider speaking with your lender to conduct a short sell on your home. This would mean they would sell your house for less than what you currently owe, losing them money, so this isn’t the most ideal solution. It’s usually only agreed upon if it’s demonstrated you can no longer make mortgage payments on the property.
Being underwater on your mortgage may feel scary, however, working with your lender, you can map out the best solution to gain stability.
Judy Gibbons is a highly accomplished Realtor licensed in Illinois, Michigan, and Florida. With an impressive list of accolades and a wealth of experience, she has become a prominent figure in the Chicagoland real estate industry.
As a global real estate advisor, Judy is known for her ability to seamlessly connect extraordinary homes with extraordinary lives. She possesses an extensive knowledge of the market, and is committed to providing world-class service to her clients. Gibbons can assist you whether it is with luxury real estate transactions, investment properties, short term rentals, or helping first time buyer clients with tall heir real estate needs.
With over 20+ years of experience, give Judy a call today and discover the difference of working with a real estate advisor who is dedicated to helping you achieve your real estate dreams, wherever they may lead you.
Designations/Licenses: Certified Distressed Property Expert, Broker, GREEN
Town Coverage: Chicago, Illinois, Arlington Heights, Illinois, Barrington, Illinois, North Barrington, Illinois
