BluegrassForeclosure.com

Is your home underwater or upside down?  Not literally of course, but figuratively.  Your house is upside down if you owe more on it than it is worth.  So, let’s say you owe the bank $200,000.00, but the house is only worth $150,000.00.  All of a sudden you have to sell your home, you have to move, or for some other reason, you have to unload it quickly.  What do you do?

“Deutsche Bank (Stock symbol: DB) made a big splash last month when it predicted that 50% of U.S. homes would be underwater – what banks call “negative equity” – by 2011.”  Read more.
It certainly seems that many home owners in this situation are just letting their home go back to the bank in foreclosure.  However, while this may be a short term fix, there are significant problems.  First and foremost is the glut of foreclosed properties on the market.  All of these homes just sitting there cause more home values to fall.  It becomes harder to sell the house later.  Your neighbor’s home value will drop.  Take a look at Detroit.
Then there is the problem with your own credit.  A foreclosure on your credit report lasts for quite some time, thereby affecting you for many years to come.  In addition, you may have to go ahead and file bankruptcy, which is another black mark against your credit.

From the New Jersey News Room: “If your lender forecloses on your home and sells it for a price that’s insufficient for the lender to recoup the unpaid balance of your loan, the uncollected amount or “deficiency” can haunt you. If you’re located in one of the many states that allow lenders to collect deficiency judgments, debt collectors can pursue you for years, perhaps getting garnishments on your employment income or attaching bank accounts for your unpaid debt. And, of course, your credit rating is negatively impacted, making credit more expensive and difficult to get.”

So what’s the answer?  Well, if you are making enough to continue paying for your mortgage, then do so.  No reason to let it go back at this point. If you can ride out the downturn of home prices, it is most likely that your house’s value will rise again.

If you lose your job, or something else happens that prevents you from making your mortgage payment, then contact your bank immediately.  It may have a program that you qualify for to get assistance.  Or they may even be able to lower your mortgage payment.

You never know until you ask.