Do you Have a Negative Equity Mortgage? Then You are Upside Down.

Its bad if you own a house that is not worth what you paid for it. A mortgage with a combined balance or individual balance that is greater than the value of your home only makes matters worse.  If this is the case then you have a negative equity mortgage or an upside down mortgage, whichever you prefer.

Most people who have a mortgage with negative equity or an upside down mortgage don’t know what to do so often times, they do nothing. If you are looking for ways to reduce your mortgage balance be prepared for some heartache, it’s not going to happen easily. There is no easy way to handle an upside down mortgage so just be patient.

Balance reduction requires leverage and one of the only leverages pieces that homeowners have is the payment they pay to their lender. payments]. payments] could be an option, but explore this area carefully.  You might be able to gain some leverage and get your lender to work with you. I am sure you heard that missing payments on your mortgage is the only way to get your lender to work with you.  Missing payments equals gaining leverage.

Now I can’t tell you to miss your mortgage payment but if you decide to do so you are heading down a path where you begin walking that fine line between foreclosure and homeownership.  You just need to know that there is a chance you could lose your home if you can’t generate the desired leverage.

The best chance you have at getting your lender to work with you is to have two mortgages.  The second mortgage is more prone to risk and exposure if you were to foreclose on your property. Settlement of your balance is the outcome here if you focus your attention in this area and that is a very good thing.  The charge off will require additional attention down the road as the account will turn into a collection account but you won’t have any further payments to that mortgage and the lien on your property will disappear.

When you look at refinancing your upside down mortgage you need to look only at the first mortgage only. Look at who insures your loan and who services it, typically who you make your payments to. It is possible to refinance if you have a Fannie Mae or Freddie Mac mortgage. There is a very good opportunity to reduce your rate or change your mortgage terms but beware there are additional guidelines and criteria that need to be met.