Underwater on Mortgage

Updated on November 01, 2011
K.J. asks from Albany, GA
13 answers

My husband and I purchased our home 3 years ago. At that time, we were both employed full time with my husband as the primary borrower on the mortgage. Since then, my husband was forced to close his business and is now a full time student. In order to make ends meet we sold our 2nd car and cut way back on monthly expenses. We will have to move to another city in 9 months for my husband to continue school in hopes of getting a job after graduation. Our plan is to sell our house so we can rent in another city. We are currently under water on our mortgage by $20,000. Things are extremely tight since I am the only one employed. What should we do? Our mortgage company doesn't even want to discuss a short sale since we are still making payments but we are trying to plan for the future.

We could try to rent it out however we would have to take it at a loss and risk having someone else trash the house out. There are repairs that need to be made to the house that we cannot afford at this time. Without the repairs, I feel renters would not be satisfied with the property.

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answers from Minneapolis on

I would talk to one or two real estate agents that specialize in short sales for advice. I don't know that the only way a mortgage company will OK a short sale is if you aren't making payments.

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answers from Washington DC on

I would rent it out and wait until you can sell to break even or a profit.

I am glad to hear that your husband is doing things to be proactive on his education and there is a program that may allow him to be hired once he completes his degree.

Not all renters are bad. Sometimes you can get renters who can work the repairs and give proof of purchase on items and discount the rent for that amount. Please don't be so negative. There are people out there who can work within your situation.

Are you able to get a job where your husband needs to move to? If not? Then I would stay put and have him find a flat to rent or even the extended stay hotels and find a job that will cover his expenses or schooling.

Pray - God will show you the path you need to go down...
Good luck.

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answers from Phoenix on

We were $150,000 underwater and our mortgage company wouldn't do a thing to help us. If we were in a fixed rate we could've stayed but they wouldn't even do that because we were so upside down. They wouldn't discuss a short sale because we were current on our payments. We got a agent who specialized in short sales to communicate with our mortgage company. Our mortgage company wouldn't take any of the offers so they foreclosed. BUT it seems like only being upside down $20,000 there has got to be something that would work for you. It seems like when we were looking into programs there were a ton for people who lost income or people who were only upside down $50,000. Of course, those programs didn't help us but surely they would help you. Also, you can hire a real estate agent and they will be able to help you short sell your home. Your bank should take the offer since you're not that underwater. I wish you the best.

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answers from Pittsburgh on

What about getting a loan to cover the 20K AND the necessary repairs? Then, hopefully you can sell it pretty quickly--or at the least rent it out with some confidence. Minimum repairs with the most bang for the buck.

I don't think having your husband move and get an apartment while you're trying to hold onto your house will work. Stay put til you sell or rent, then make a quick move to a short term rental then look for something more permanent as a rental after you get settled in the new town.

Do NOT default on your payments--hang on to that house until you're ready to rent/sell!

Remember--you only need O. qualified buyer or renter!

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answers from Seattle on

I am so sorry, know you are not alone. I know this is stressful. My advice would be to rent your current home out. As you know this is not a sellers market but a buyers market. Maybe you have a family member close by to your current home who can help out with issues when they come up with your rental. I wish you the best of luck. I wish I had the answer for you.

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answers from Seattle on

Ideally? I would lease it out.

You could take out a loan to pay off your mortgage, or take out a loan to fix it up.

I'm looking at needing to do the same thing for a different reason. I'll take a loss on the rental, BUT, nowhere NEAR as much as I'd lose selling right now (especially compared to selling in a few years when I could profit significantly from the sale). During which time the market can improve over the next few years, as will my (hopefully!) financial position. I'll be able to afford to rent and pay the loss on the rental and the management company (I won't landlord myself, the management company is sooooo worth it for me; including things like the fact that if a renter DID trash the place -unlikely, most renters are conscientious- they're lawyer'd up for evictions and reclaiming loss from damage).

((ALSO look into taxes, when you're taking a loss on a rental, it changes things a bit))

This house, even though it's underwater a smidge (like yours, next to nothing compared to some which are a couple hundred thousand under) is my financial security. The ONE asset I really possess. Given time the market will pick back up (this SAME bubble and slump happens ever 10 years... just look at tax records for the past 100-200 years), I'll be able to add onto it, and be able to sell it at a profit.

This is just what *I* would do.

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answers from Lakeland on

As a landlord I would suggest renting it out. It would be easier to pay say (example) $100.00 toward the mortgage then the entire amount. I would also try to find a handyman/woman that would be willing to do some work. Check your local rentals to get an idea of what to ask. I would also strongly recommend going through a realtor so you get a good tenant. The realtors charge one month’s rent to you, but I can say from experience it is so worth it.

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answers from Redding on

Maybe you could screen some renters and hopefully work a deal with them on doing the repairs for a discounted rent for a period of time?
I thought I heard on the news just recently that a new plan for refinancing so no one else would lose a home was being implemented? Do a little more research on a re-fy.

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answers from San Diego on

Can't you rent it out?

1 mom found this helpful


answers from St. Louis on

You may have to sell for what you can get and take a loan out to pay off the balance. Sure the interest rate will be higher than your mortgage because it is no longer a secured loan but it would keep your credit intact and allow you to sell the house and move.

1 mom found this helpful


answers from Atlanta on

I don't know if you have looked into the "rent to own" option, but it may be another possibility. There are many people who have to relocate for jobs that cannot sell their current home b/c of the market. These families can't afford to buy a new house until their old house sells and may be very interested in getting into a rent-to-own contract. Just another option to think about. Good luck!



answers from Los Angeles on

I'm sorry I don't have more information on this, but last week the president announced a new program to help homeowners whose mortgages are underwater refinance. Perhaps you can Google it? It was pretty big news.
Best of luck -



answers from Atlanta on

I agree with Jackie P....Rent it out but go through a management or realty company. Regarding repairs for a rental property, minor repairs are fine but don't spend a lot of money on things that will be ruined anyway like carpets or flooring. You would be surprised about the priority of items that people want when renting a home (fenced yard, privacy, additional space) satisfaction depends on the renter. If floors are in really bad shape, find a discount store and do as much of it as you can yourself. I would stay away from carpet and find inexpensive tongue-and-groove durable flooring. Just because you rent, a trashed house is not inevitable. Just make sure your lease states things that you require (example - No dangerous dogs, upkeep of the yard, no trash or vehicles in yard or driveway, etc). Good luck!

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