Lower Mortgage Payments And Reduced Mortgage Debt On An Underwater Mortgage – What’s It Worth?
By Jim Stevenson
Depending upon where you live, the prices of homes have dropped anywhere from 10% to 15% to over 60% of their value from just a few years ago. “Manhattan real estate prices decreased from 20% to 25% relative to peak.” according to The Street Manhattan Real Estate Prices Drop article in Jan. 5, 2010. And the Los Angeles Times last June, said that Median home prices drop below 1989 levels in some parts of Southland. What does this all mean for you?
When You Don’t Need Or Want To Sell Your Home You’re Okay
If you can make your current mortgage payments and you don’t intend to move, it means absolutely nothing. You just go on making monthly mortgage payments, and stay where you are. You personally haven’t lost anything. It’s just a paper number that doesn’t make any difference.
You Have A Problem When You Can’t Afford Your Mortgage Payments
With all this devaluation of home prices, what is your mortgage debt situation? Do you find that your home price has dropped well below your current mortgage balance? If you want or need to sell your home, you’re in big trouble. No one is going to pay what your mortgage is worth. They’ll only pay what your house is worth, the current fair market value, FMV.
How Does This Underwater Mortgage Situation Affect You?
Let’s take an example of a real estate price drop of 20% from when you got your mortgage, and let’s assume that your home was purchased in the last 12 to 15 years with a creative adjustable rate mortgage (ARM) giving you 100% financing when you bought. Also suppose your house was purchased during a high time for a reasonable price of $200,000.
That 20% Drop Is A $40,000 Price Drop To $160,000
How can you sell your house for the $200,000 you owe when it’s only worth $160,000? You’re now stuck with an underwater mortgage. No one wants to take over monthly mortgage payments that are too high, and you can’t rent it because the average rent would be less than your mortgage payments. So how can you bring things back in balance?
What’s The Solution To An Underwater Mortgage?
You could attempt to get a mortgage loan modification with your bank. But the banks are doing very few of these mortgage modifications. In addition, the banks want to add on any monthly payment reductions to the back end of the mortgage loan making you even further underwater.
How Much Is Clearing $40,000 In Underwater Mortgage Debt Worth?
So, how much would you be willing to pay to clear the $40,000 in underwater mortgage debt? How much is it worth to you? If you could clear that mortgage debt and get back to 100% financing at the current value, and also have lower monthly mortgage payments, how much is that worth?
Only You Can Tell
If it may be worth something to you, we have a program called the Mortgage Debt Reset Program which can do just that. We can get rid of the underwater mortgage debt and bring it back to 100% financing with mortgage payments of about half of what you’re paying now. So how much is that worth?
To see whether it’s worth it to you to qualify for our Mortgage Debt Reset Program go to Find Out More About Our Mortgage Debt Reset Program and sign up to receive our free no obligation information package.
[Originally published on Mortgage Debt Reset May 7, 2010]
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