Fourth Quarter And Down By 6: Whats Your Game Plan For Keeping Your Underwater Home?

At Homeowner 101 we believe that no matter what situation youre in underwater mortgage

, unable to make your payments, need to move but cant sell you have options. The only wrong decision is to not make one. So if you want to keep your home but cant afford to, read on for some strategies to get you get back to the place where home is both a place to make memories and break bread and a source of financial stability and peace of mind.

We talk a lot about the options you have. We talk about how a foreclosure doesnt have to be the dreaded F word. About how making the decision to leave to do a short sale or a strategic default might be the best option for you in the long run. But staying in your home might be the best decision for you given your circumstance. Theres nothing wrong with that. So if youre thinking about how to make homeownership work for you today, here are some options:

Option #1: Stay and pay. Doing nothing not trying for a mortgage medication, not asking about loan forgiveness, not thinking about a short sale or strategic default is certainly one option. But not doing anything not even exploring other options is not a path we recommend. Its hard to count the number of clients who have great options available for improving their financial situation, if only they would stand up and take action. (You can start today by attending one of our free online webinars or signing up for our Underwater Homeowners Assessment and Action Plan.)

Option #2: Mortgage refinance. It used to be that homeowners refinanced their mortgage every three to five years (or, at least, considered whether doing so would benefit them). For some homeowners, refinancing is still an option. And mortgage interest rates are still at historically low levels which could easily mean thousands of dollars a year in interest savings. If you have equity in your home, have good credit, and can pay your mortgage, you may be able to get yourself some breathing room with a refinance. At the least, its an option worth exploring.

Option #3: Get a loan modification. If you have negative equity (you owe more on your mortgage than your house is worth), you cant afford your mortgage payment, and/or your credit score is too low, a loan modification might be the strategy you need to stay in your home.

There are a number of ways in which your lender can adjust your mortgage so that you have smaller payments. You lender may be willing to

extend the term of your loan. Some lenders may agree to change your 15-year mortgage to a 30-year mortgage, or your 30-year mortgage to a 40-year mortgage, which can lower your monthly payment. But heres one place where having an objective third-party consultant (not your lender) analyze the situation is critical: some lenders will extend the term but raise the interest rate, so that while your mortgage payment is less today you pay more interest over the life of the loan sometimes significantly more.

give you a break to get back on track. If you had difficulty making your mortgage payments due to unforeseen money problems (a job loss or medical bills, for example), discuss your situation with your lender they may be willing to work with you to be back in good standing. Your lender may allow you to make up missed payments by either adding them to the end of your loan or spreading them over the remaining loan (adding a fixed amount to each months payment). Some lenders will forgive missed payments altogether.

reduce your principal. Although a balance reduction, also sometimes called loan forgiveness, is rare, your lender may agree to reduce the outstanding principal balance of your mortgage. When you borrow money to buy your house, your bank lends you the principal amount (the cost of the house less your down payment) and then charges you interest every month for borrowing the money. Lowering your principle lowers that balance you owe to the bank, which means youre paying interest on less money, which reduces your monthly mortgage payment.

The federal government also has a number of government mortgage help programs, which you can learn about in the blog article Loan Modification Help from the Feds for Distressed and Underwater Homeowners.

These are just some of the options you have for keeping your home. But negotiating a mortgage refinance, loan modification, or principal reduction can be a hard slog if you try to go it alone. We can help. Well help you determine which action is the best one for you, given your circumstances, then well help you do it. Get started with your Underwater Homeowner Assessment and Action Plan today.

by: Molly Castelazo

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