Owe more than your home is worth?

I started this blog because many consumers think that because they owe more on their house than what it may be worth, they have to do something…a short sale or be foreclosed on…something!

First and foremost, just because you owe more on something than what it is worth, doesn’t mean you have to do anything. As soon as you drove your new car off the dealership lot, you owed more than what it was worth, but chances are, like me, instead of worrying about it, you just continued to enjoy your car.

If for any reason at all, you do feel like you need to do something, you have options. While there is not enough time on here to cover them all, I can give you the most common.

First, as I already mentioned, you can do nothing. You can continue to pay your mortgage and enjoy your house as long as you keep paying it. Orange County home prices in the past have always appreciated over time. You can probably expect they will again.

Secondly, you may be able to refinance with your current lender to a lower rate. Today the banks would rather help refinance you instead of having to take your home back. It is in their best interest to help you in this situation. Many real estate agents and loan officers will not take the risk in telling you this because it is not in their best interest to do so. This is the best remedy for many people in this same situation.

The third option is that you can sell your home….even if you do owe more than it is worth. This is what is known as a short sale. You will have the option of paying the bank the difference in what is owed and what it is worth but if you cannot afford to pay that difference, the bank will typically still allow you to do so. The best thing about this option is that right now, if it is your primary residence, you may have no tax consequences whatsoever. You will need to check with your CPA for more information on this situation as I am not a tax advisor.

Another option is to walk away. Stop making your payments and walk away. The bank will foreclose on your house and this typically has the worst tax consequences for you, but it is an option for many. Again, discuss this or any of these options with a CPA before proceeding.

You do have other options as well, and I would love to share them all with you. As you can well imagine, there’s just too much to tell you about on this blog, but it’s easy for you to get more information. There is no cost, hassle or obligation to obtain these options. It is just my small way of helping educate people who may be facing home ownership challenges.

So call me, Dave Osborne with Referral RES at 714-349-5454. I look forward to helping you out.

Thanks!