Real Estate Market Hurting Homeowners

With many people unemployed in this economy, a lot of homeowners find that they are unable to keep paying their monthly mortgage payments. Some of them have good, fixed rates but, without jobs, they still cannot keep paying. Some homeowners are worse off and have adjustable rate mortgages and find their home payments adjust to more than they can afford. Many homeowners cannot afford to stay in their current homes so they should sell and move on. However, with dropping home prices, they also find themselves with upside down mortgages. That means, they owe the mortgage companies more than their homes are worth. So, what are their options?

Is Selling an Option?

The first option that comes to mind for lots of homeowners is to sell and move on. But, if they were to sell their homes, they will get less for them than what they owe the lenders. Therefore, selling might not be the best option. However, it is always a good idea to consult a real estate agent to make absolutely certain that there is no 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.

Is Refinancing an Option?

Usually when you owe more than your home is worth, lenders do not want to lend. But, there might be options that allow you to refinance your home or modify your loan since the rates are historically low right now. If your credit is good or fair and want to explore the option of refinancing or have any home loan questions, call your mortgage company as well as other lenders for comparison. Sometimes, your own bank might not want to help you but other banks may be able to.

Mortgage Forgiveness and Foreclosure

A lot of homeowners cannot sell their homes, cannot refinance and cannot modify their loans. Then their mortgage companies try to foreclose on them. 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 go ahead with foreclosure, however, there is the new 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.