Can You Win If You Owe More Than Your House is Worth?
Can you win if you owe more than your house is worth? Well, that’s a great question, and it was on the mind of Mike and Dana for the last three months. They were stuck in foreclosure. They tried to sell the house, but they could not get a sale that would be high enough to cover the amount they owed.
They felt like their world was caving in upon them. Have you ever had this horrible feeling? Have you been stuck in the foreclosure procedure before? Well let me tell you some hardcore facts about what you can do.
I shared with them some tips that proved to be so powerful that they asked me to share them with everybody else. Why did they do that?
They did that because these ideas that I shared with them actually enabled them, though stuck in the foreclosure procedure, to actually find a way out, or creatively, strategically, and through the use of much innovation stop their foreclosure procedure and end the nightmare.
I introduced them to a group I have partnered with called the Loan Negotiator Group. By using the services of the Loan Negotiator Group. They were able to structure a way of getting out of their mortgage, getting out of their house, and getting into a new property.
So let me share with you what I shared with them. First of all, if you’re stuck in the foreclosure process or struggling through the foreclosure procedure, you want to be able to understand exactly where you are in the foreclosure procedure.
You’ve got to know exactly what the law is in your state, in your county, and in your city. Then you’ve got to know exactly how much your house is worth and exactly how much you owe.
It’s just so surprising to me when I speak to people on a daily basis, that I find that they know they’re in foreclosure, but they don’t know how much they owe.
Are you in this situation? Well then you’re not alone in that issue. Many others are. They don’t know how much their house is worth. They don’t know how many months they are in arrears.
And I’m like, come on man, if you really are serious about stopping the foreclosure procedure, if you really want help to get back on your feet financially, it begins by doing the little things that you can do, taking the little steps that you can take. So the first thing you’ve got to do is find out all the information that’s available to you about your house.
Most of it you already know. How much are your monthly payments, how long has it been since you’ve made a monthly payment, how much are you in arrears on your monthly payment, how much is the bank foreclosing — what is the bank foreclosure amount that they’re asking upon collections.
How much are they trying to close out the loan for? What is the total amount of the value of the house compared to the amount that you owe on the house? Now, if you find yourself in a position where you owe more than the house is worth you know for sure that you must make a powerful choice about what you are going to do.
Upon finding out the proper information about exactly how much the house or even just a ball park figure about how much the house is worth you can decide if you wish to walk away or stay in the house and hope the value goes back up.
If you find out that you owe more money than the house is worth, then here is the question for you, and this is a question that only you can ask. The question is, is it worth me for to stay in the house, or should I let the house go and get another house?
Wow, what an incredible question!!! So, let’s think about this for a moment. If you put $50,000 down to buy the house, and now you are in a house that is worth less than you put down then clearly you’ve lost your equity due to this housing crisis.
However don’t despair, all is not lost. Because through some creative actions taken in this depressed market you will be able to buy another property fairly easily at a tremendous discount if you buy REO’s or auctions directly from a bank.
So, suppose you bought a house worth $200,000. You put $50,000 down to buy the house, and you had a mortgage of $150,000 on the house, and now the house is only worth $150,000.
Well suppose it is worth exactly how much you owe, or maybe it’s even worth less. If it’s worth $145,000, and you owe $150,000. The question is, well, if I walk away from the house, I have walked away from my $50,000 investment.
But then, when you think about it, if you stay in the house, you are staying in a house that is worth far less than it was when you bought it, so you are still out your $50,000 investment. The question is what can you do in this scenario, in this situation. What is possible for somebody? Well, two things:
1. Realize that the market goes up and down. That is what real estate markets do. They just go up and down. So, if you were to stay, it is possible over time the market will go back up. It will go back up to $200,000 where you bought it, it will go way beyond that, and you will regain your $50,000 deposit, and even more.
So, that’s one possibility. You could stay in the house, as long as you could afford to catch up on your risk up on the monthly payments, and make those monthly payments on a regular basis, you could stay in the house.
In other words, one way to win if you are in a house where the value has diminished so greatly that it is now worth less than the mortgage on it, is just hang tight. Hold on, that’s right, hold on for the ride.
It’s going to be a bumpy ride, but hold on. Don’t cut and run, hold on. Don’t pack it in, hold on. Don’t give up, don’t quit, hold on, because as the market went down, the market can come up and most economists and real estate investors believe that once we get a few months, maybe a couple of years behind us, we will be over this economic crisis, and most of the real estate markets will come back.
Also, know that they are not making any more land out there, and yet they are still making more people, so the housing market and the real estate industry, investment industry, still responds to the basic supply and demand pattern. As supply increases, demand diminishes. As supply diminishes, demand increases.
So, what you have to know is that by staying in the house and waiting, and just being patient, most likely, you will win. This strategy works best if you are able to afford to wait. If you can are not pressed to sell the house or cash out your investments.
2. Another way of winning is if the market were to diminish below the value of the house — or if the market were to diminish below the value of the loan on the house, and you end up owing more on the house than the house is really worth, walk away from the house.
What would happen if you walked away? If you could walk away safely, if you could negotiate with the bank or the lender to do a deed in lieu where you just simply turn the house over to the banker, you could walk safely.
Now walking away from the house if the house is worth less than the mortgaged value against the house is effective if you know how to do it safely.
The power of this option is that in a down economy and a depressed market where there’s an abundance of properties to buy, you can turn the foreclosure circumstances/situations into a positive thing for yourself.
For instance, right now, instead of finding yourself in a position where you are in a house that had diminished in value so greatly, and that you’re not able to make the payments, and you don’t feel inspired to make the payments or excited about making the payments because the house is no longer worth what it once was, you can walk away from that house, but don’t just do it without structuring the walk away properly with your lender.
Then you position yourself to buy another house way below market value. How would you do that? Well, you would not approach a realtor. You would not buy from the regular conventional market. Instead, you would buy directly from the bank.
The real estate market right now is filled to the brim with properties for sale that are being sold right now far below the current market value.
I’m not talking about <Garbled> of being sold below the market value of a year ago or two years ago, but I’m talking about properties that are being sold far below the current market value. What does that mean for you?
Well, that means that if you walked away from a house that you bought for 200,000, you put $50,000 down, you owe $150,000 <Garbled> value of the house has gone down so that it’s now worth less than the $150,000 loan on the house.
It’s quite possible that you can find a property that’s worth $200,000 again, but you can get it for the price of $100,000 or $75,000. Wow!!! What would that mean?
That would mean that you would negotiate a loan agreement with the bank whereby you buy a piece of property that’s worth $200,000 right now to a bank auction or a bank sale off the bank’s aureoles. You could buy a property right now that’s worth $200,000.
You can get it for 100,000, $120,000. If you were to put down 10% or 25%, 25% of $100,000, oh my goodness. You put down $25,000. Well, if you put down $25,000, you ask well where would I get the $25,000 from?
Well, that’s the place in which you have to be creative, and I’ll be glad to talk about that in my next post. But for that — for right now, I just want to leave you with the thought, and I want you to chew on the idea of, buying a piece of property that’s worth 200,000, buy it for $100,000. That’s doable.
Buy it for 120. Buy it for 130. That’s doable. You’re buying property from the aureole market that is way below its market value and would be in the property. That’s doable, and then, I know someone’s asking the question, well how do I structure this deed in lieu.
The deed in lieu simply means you give the deed of your previous house, your old house, the one that’s lost its value, has gone way down below market value, turn that deed over to the bank, and the keys, and you escape being foreclosed upon.
This saves your credit and frees you from being responsible for the mortgage. The biggest challenge with the deed in lieu is that it must be done properly and carefully to ensure that you are not still on the hook for a deficiency judgement or taxes that can sometimes be assessed against you for any shortfall the bank suffers.
In order to successfully structure a deed in lieu I encourage you to do let the Loan Negotiator Group work with you directly. By connecting with the loan negotiator group that I have partnered with you will get a powerful solution and be able to walk away free and clear. Simply click on the link loan negotiator group, and fill out the entire questionaire completely and thoroughly. They will contact you within 24 hours to get more information from you and help you get the loan modification that’s necessary in order to do a deed in lieu.
The Foreclosure Doctor Online
Eugene on Tue, 21st Oct 2008 11:28 pm
looking forward for more information about this. thanks for sharing. Eugene
John Smith on Sat, 25th Oct 2008 1:02 am
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william on Thu, 14th May 2009 4:17 pm
I owe $240.000 on my first loan & I owe $42.000 on a 2nd loan home equity line of credit. I had a house fire 2 years ago & got behind on my payments , I worked out a loan modification with the mortgage co. now the bank wants me to pay the full amount, I cant do that, What are my options?
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