Negative Equity | 3 Ways To Recover From A Difficult Situation
Having negative equity in your house is a nightmare coming to life. It doesn’t just drag down the value of your property, it also affects your overall financial standing. The equity becomes negative when the mortgage still owed is bigger than the actual value of the house.
This lessens your chances of getting a good sale price for the property when it is time to relocate to secure a more stable employment or if you don’t plan on staying longer in your current home. This is considered a common situation for most homeowners across the country due to factors that may be out of their control.
According to the report made by realtytrac.com, “Nationwide 6.7 million properties representing 12 percent of all properties with a mortgage were seriously underwater at the end of the first quarter of 2016 – down 600,000 from a year ago and cut nearly in half from the peak of nearly 13 million in the second quarter of 2012. Despite home prices rising 47 percent since bottoming out in February 2012, some homeowners are still waiting for the home price tide to lift them back to home equity dry land. Here are the top seven reasons homeowners are still underwater based in our big data analysis of 56 million U.S. properties with a mortgage.”
3 Ways To Pull Up Your Equity
With the reality of this matter that affects a lot of households, both the government and financial experts and agencies have laid out ways to help pull up and improve home equity.
Refinancing Your Mortgage
When you struggle with the mortgage payments on your home, the greatest fear is losing your home to foreclosure. Refinancing could help lower the monthly due and provide some form of relief, but most lenders aren’t open to refinancing a property with negative equity. There are other related blogs in sellanyhouse.com.
There is a government program that enables some homeowners to refinances their house that has negative equity. The Home Affordable Refinance Program (HARP) may grant homeowners a loan to refinance to a more affordable payment. The homeowners must file an application to HARP to avail of the program and the loan must be underwritten by a lending team.
Move Out, Rent It Out
Families are eager to buy a house especially if it gives them extra space and room to move around. Since the option to sell house fast in Los Angeles isn’t available to properties with negative equity, one workaround is to rent it out and move into a new house. By renting out the property, it can pay for itself.
But renting a house isn’t simple and doable in one day, especially if you do not have an experience in being a landlord. You need to conduct thorough research on the matter and talk to an experienced landlord for advice and guidance.
Reduce Your Debt
This is probably the most basic and practical solution to increase your home’s equity. Slowly but consistently, pay off the debt you owe. One of the best ways to pay down your mortgage is to pay more than your monthly payment each month. When you do so, all that extra money goes directly towards paying down the principle loan, not to interest. If you have savings you can use to pay off some of the mortgage dues, take a portion of it and lower the debt. Some lenders may allow you to pay off up to 10% without penalty, and smaller repayments are deemed helpful. Contact your lender to make sure.
Consider Outside Help
SellAnyHouse LA is a home buying company dedicated to help homeowners who are struggling with their finances. We buy houses in Los Angeles from families facing common housing issues, even the most serious and difficult matters. Whether it is a house underwater or with negative equity, we find ways to help alleviate the situation. Check out what other housing problems we can help you with by visiting our recent news article at from www.sellanyhouse.com.
We also provide free in-house consultations to those who want to learn more about our fast and hassle-free transactions. We have a team of real estate consultants willing to impart their knowledge and expertise in the real estate market. If you need help, don’t hesitate to contact us! We are happy to help!
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