How Do You Get Out Of An Upside Down Home Mortgage?
Home mortgage upside down? Lot of areas in Florida and other parts of the country are in such a situation right now. What is an upside down mortgage? A mortgage or a home is considered upside down when the homeowner owes more on the house than its present value. For example, consider the case of a homeowner John who owes $500,000 on the house. John looks for real estate comparisons in his neighborhood and finds that the best estimate for the present market value of the home is $300,000. That leaves John with $200,000 of negative equity. If he decides to sell the house, he will owe the lender $200,000 and end up paying other costs to sell the house out of his pocket. So, what is John’s best option? Getting out of an Upside Down Mortgage John can apply for a principal reduction – with a principal reduction, the negative equity in John’s home can be eliminated. The new loan for John will be 90% of the present market value i.e. $270,000. John will get the new loan at market rates or slight
