In today’s rough economy, we are seeing something that hasn’t happened in ages… homes are losing value instead of gaining value.  When we buy a home, we consider it an investment.  We want to sit on it for years to come and hopefully sell it for a profit.  Well, today things are different and it’s a lot different and many good homeowners are suffering on careless people’s mistakes.  It may not sound fair but there some things you can do when you’re upside down in a mortgage.

If you can pay, do it! - If you can pay your mortgage, continue to do so.  Your credit score in life is more important that anything if you want a future loan, etc.  If you have the money to pay it, there’s no reason you shouldn’t want to.  The thing is if you plan on living in that house for a long time, why do you care what it’s worth?  Do you want to sell it?  No!  Who cares if it’s worth a penny or a million dollars.  You should only care if you’re selling.

Call up the bank and renegotiate - If you’re having troubles paying your mortgage, you’re not alone.  Call up the banks but be aware that they are going to be very busy.  Explain to the bank what your situation is and ask them what they can do for you.  If you’re up on your payments, they may not do anything but tell them if you’ve lost a job, etc.  Tell them that it’s going to be very hard to re-work your mortgage.  Sometimes, they will change ways and sometimes they won’t even care.

If you have to sell, do a short sale -If you have to sell your house for any reason, you may find that you’ll have to do a short sale.  If you’re not familiar with this process, it’s basically letting you sell the house at a loss but the bank will let you walk away without you having to owe them anything.  The bank does have to approve all short sale transactions and people have found that this process can take weeks which can scare away many potential buyers.

Foreclose on it - This will be your last option but if you find you can’t sell it, you can’t pay it off, etc, you’ll just have to walk away from it.  Yes, it’s going to hurt your credit but there’s not much you can do in this economic climate.  In the future, you’ll just have to learn from your mistakes and move on.

Being upside down in a mortgage can stink but if you weather out the storm, who knows if you find a new job or if your house goes in value over time.  As I stated above, if you can afford your mortgage, just pay it because only worry about your value when you sell.  In the mean time, explore these options and see what works for you.