Lots of homeowners are confused and don’t know what to do if their home has negative equity. In bay area, most of the homes have lost their equity and now in negative equity.
In California, 34.7% homeowners with mortgage are upside down, they owe more on their home than its worth. Negative equity means when a property value is less than what you owe on your mortgage amount. For example if the property value is $500,000 and the mortgage amount on that house is $700,000 then it has negative amount (equity) of $200,000. According to Zillow, in California, home prices have dropped -8.7% in the year of 2009, it depends on the area also, in some areas, prices have dropped way more than 8%.
If you are experiencing the negative equity also known as upside down value then if you can hold on until the market picks up then just stay there and don’t worry about the market at this time but if you really want to sell then consult with an experienced realtor to see your options in this type of market because everyone’s situation is different and need to work differently with each home owner.
If you are thinking of selling because of hardship and negative equity, then contact your lender directly as soon as possible for loan modification or refinance, your bank has many programs available to save your home from foreclosure. If your loan is Fannie or Freddie Mac backed loan, then check with your lender for Home Affordable Refinance program to lower your monthly mortgage payment which will help you to stay in your house. To see if your loan is Fannie or Freddie Mac backed loan then visit the official site (https://ww3.freddiemac.com/corporate/ or http://loanlookup.fanniemae.com/loanlookup/ ).
If loan modification or refinance or any other options doesn’t work out then you can do short sale to sell your house to avoid from foreclosure. Short sale will affect your credit but at least you can avoid foreclosure and you can buy a house in the next 18- 24 months. If you are thinking of short sale then always work with an experienced short sale real estate agent who will assist you in negotiating with your lender and sell your house.
If you are in bay area and your house has upside down value (negative equity), then contact me to find out your options on what to do next and my service is free for you. You can reach me at 510-366-9405 or click here to contact me.
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