Many homeowners today are facing this
situation. Many do not know what to do and are simply
overwhelmed and don't know what to do.
What are your options, if you are a homeowner who canít make
your mortgage payment? There arenít many, but you do have
Refinance or Apply for
Since so many people are upside-down in their mortgages, and
since so many mortgage companies behaved unethically in
approving loans that shouldnít have been approved, the
government stepped in to provide an option for homeowners
who cant afford their mortgages.
If you meet certain requirements, you may be eligible for
Home Affordable Program, a voluntary program, in which
banks either refinance or modify your loan, to help you
better afford your mortgage.
Get Rid of Your House
Sometimes the best thing to do is get out from under your
mortgage. If you opt to sell your home, selling it the
traditional way is obviously the best way to go. However,
because of falling real estate values, a lot of people donít
have that option. They owe more on the property than itís
worth. You may still be able to sell your home, though, if
you can get the bank to cooperate.
Short Sale: A short sale is when the bank agrees to
let you sell your home for less than what you owe on your
mortgage. A bank does not have to agree to a short sale, but
if it does, itís a good option. A short sale is less
damaging to your credit than a foreclosure, and it will get
you out from under a mortgage you canít afford.
Deed in Lieu of Foreclosure: Instead of foreclosing
on a home, sometimes a bank will accept a transfer of the
deed in lieu of foreclosure proceedings. You sign the deed
over, and the bank owns your house. The bank is then free to
sell the house to recoup the cost of your loan.
Keep in mind that with both a short sale and a deed in lieu
of foreclosure, there are tax implications. Before pursuing
either of these options, make sure you consult a tax
professional to find out what the tax ramifications will be.
Iím not a personal fan of bankruptcy, but sometimes itís the
best option. In a Chapter 13 bankruptcy, you are allowed to
keep your house, but you will have to submit a plan to repay
Before deciding on a Chapter 13 bankruptcy, you need to
be sure you can actually repay your debts. If your
mortgage was too big for your income, chances are a
bankruptcy will not help you. But if you had a temporary
issue that caused you to get behind in your payments, and
that issue is resolved, a Chapter 13 bankruptcy might
benefit you. Please consult a Tax Professional and Attorney
before deciding on this option.
Walk Away from Your Home
This should be the option of last resort. If you canít
refinance or modify your loan, if your bank wonít agree to a
short sale or deed in lieu of foreclosure, and if bankruptcy
isnít an option for you, foreclosure may be your only
If foreclosure is imminent, stay in your home as long as
possible. Take the money you would have applied to your
mortgage payment and put it in savings, so you can afford a
deposit on another place to live.
While I donít believe people should walk away from their
debts, sometimes itís the only option. People make mistakes,
economies tank, illnesses with big medical bills hit. If
youíve tried to work with your bank, and you donít have any
other option than to walk away, then sometimes you just have
to walk away.
Beware of Scams
Since mortgage issues are so common right now, a lot of
scammers are trying to prey on desperate homeowners. If you
work with a third party to try to resolve your mortgage
problems, make sure they are a reputable agency. Watch out
for anyone who tries to charge you a fee, pressures you to
sign over your deed, or tries to collect mortgage payments
from you. There are no miracle fixes for mortgage problems,
so donít believe anyone who tells you they can quickly and
easily help you out. If it sounds too good to be true, it
The information provided herein is for informational
purposes only and as not intended to be Tax or Legal advice.
Please consult a professional before making any decision..