What To Do If You Owe More Than Your House is Worth: Part One

Read part one of our series on what to do if you owe more than your house is worth.

Do you owe more than your house is worth? Are you upside down? Did you buy a home in Aurora, Centennial or Littleton, expecting the price to go up, but instead saw the value go down? If your house is worth less than you owe, it can be difficult to keep your head above water. Holding on to a bad investment causes stress, and it also prevents you from going after other opportunities. There are several options that are available to you to put your bad investment in the past, and move on to the future. If you owe more than your house is worth, there are options.

[pullquote align=”center” textalign=”center” width=”100%”]Read on for a few options an experienced bankruptcy attorney can give you:[/pullquote]

Try for a Loan Modification in Aurora, Centennial and Littleton

If you are having a difficult time making payments on your home, but you believe that the value will go up eventually, you can try to modify your loan. Each modification is done individually, and so results can’t be guaranteed, but the benefits could include: Missed payment forgiveness, reduced payments and interest rates, and occasionally, a reduction of your principal. This is also a good option if your credit is not good enough to qualify for a new loan on a different house.

Where to start:

Call the Denver HUD office for assistance, or contact an experienced mortgage broker. If you decide to try for a loan modification, be persistent, and very patient. It takes time, and lenders are notorious for lost paperwork. You’ll need to keep records and copies of all correspondence and keep pushing! Have a secondary plan in place – often, if a loan modification fails, you could quickly be faced with a foreclosure. Be careful of private companies offering a loan modification plan which sounds too good to be true. It probably is.

Short Sale – Sell your Home

A short sale is where you quickly sell your home for less than what you owe the lender, who then agrees to absorb the difference as a loss. Be careful, however. If a short sale is negotiated incorrectly, the lender could retain the right to sue you to collect the remainder of your loan, instead of forgiving it.

Where to start:

Don’t get stuck and go through with the wrong kind of short sale. Find a good realtor who has experience with true short sales, and knows what conditions the bank will accept. The wrong kind of short sale can be much, much worse than doing nothing at all.

We hope we gave you some answers about what to do if you owe more than your house is worth. Keep your eye out for part two next week.

Gaining knowledge will help lessen the intimidation of bankruptcy and get you started on your fresh start sooner. Contact experienced Centennial, Littleton and Aurora bankruptcy lawyer Barry Arrington at 303-205-7870, or submit the “Get Help Now” form, and he will fight to give you the best, fresh start possible.

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