Is Your Home Mortgage Upside Down?

It might sound like a strange phrase, but an upside down mortgage simply means that you owe more on your home that what it is valued. With the values of almost everything depreciating in the present economy, the majority of homeowners are finding themselves owing much more than their home is worth.

When the amount of a debt is more than the property that secured that debt is worth, it creates a negative equity situation. This situation in turn can make it very hard, or impossible to refinance your home to take advantage of lower interest rates or lower payments.

If you’re in debt only around 5 percent more than what your home is appraised for, you might be able to find a lender that will refinance the mortgage. But, if you have a severely negative home equity, you’ll be hard pressed to find anyone that will approve a loan.

If you’ve found yourself in this situation, short of walking away from your home and your mortgage obligation, there’s very little that you can do. If at all possible keep up with your payments to keep from losing your home and your investment. If you can’t make the payments, try to renegotiate with your lending institution for a modified loan.