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What to do When You Owe More than a House is worth and Want to Sell

Robert Smith owns a home but whenever someone ask him whether he own a property, his answer is always, No. Why? Let me tell you why he does that, because he has not paid the mortgage on his home that he bought many years ago. Robert Smith owes a sum of 576,000$ on his property, which now only worth 234,000$ in the market. “I do not want to own that house anymore”, he stated and he is not alone in such a dire situation.

Robert Smith ended in this situation when the housing bubble bust in the late 2000’s and mortgage holders ended up with the houses that value less than what they owe to their lenders. Even if they now decided to sell, they would not be able to get enough amounts to pay their mortgage debts.

 So, if you are one of those people who do not know what to do when you are more in debt than your home is worth and you really want to sell then read along this article. We have collected some options for you that you can opt:

  1. Pay Regularly

    The very first option you may have is to stay and make regular payments to your mortgage loan. There could be many reasons you want to pay but the most important one is that you do not want to lower your credit score rating.

    Without making payment on time and regularly, your credit score would become negative and it would be difficult for you to take any more loans in the future for any purpose or need. So, if you think you need loan in future than you need to pay the mortgage debt and meet your obligation.

  2. Option of Refinancing

    One of the many options is to use refinancing of your mortgage debt if you want to sell it and buy another house for your family. This is especially really applicable if you have lived in that house for a long time and have contributed enough in paying back the principle amount.

    But it is true that if you home value less than what you owe on it, it might become difficult for you to find a lender that can help you refinancing your mortgage debt. Nonetheless, there are programs that can still help you such as HARP (Home Affordable Refinance Program).

  3. Loan Modification

    You can get the loan modify to make your payment smaller in amount. This may help you to pay the mortgage loan with your current cash flow.

  4. Foreclosure

    The last option is to let the bank take over your property for foreclosure and sell it and recover their amount of money you owed to them.

While foreclosure may appear to you the first option to opt this might not be right. You must need to understand what foreclosure would do to you. Foreclosure would hit your credit score rating immensely and you would not be able to get the credit to get your dream house next time.