One of the scariest things for a homeowner to face is the possibility of being underwater on your home loan. This means you are on a situation where you owe more for the house than the house is currently worth. During the most recent housing crisis, this unfortunate situation became the reality for a large number of Americans. Thankfully, as the market has improved since then, the number of people in this situation has declined. However, there are still individuals who are struggling after finding themselves in this position. If this is you, here are a few options you have.

  1. The most obvious action to take is to stay, keep paying, and hope that the value of the house improves. If you can make it through the period where the house is worth less than the loan, you can avoid potential credit consequences, and also end  up not losing money on the home when you do sell it. There can be negatives here though. If the property does not go up in value, you may end up in a financially untenable position for an even longer period of time.
  2. Refinance. While classically it can be difficult to refinance if you have negative equity, there are some options. The federal government implemented HARP, or the Home Affordable Refinance Program during the recession, and there are still some people who qualify, despite the fact that it was initially intended to end fairly quickly. Depending on when you got your loan, refinancing may not be completely out of the question.
  3. The third option is a short sale. This refers to selling the house for less than you owe. While this can be an unpleasant reality to face, this can allow the homeowner to drastically reduce their debt, and move forward into a situation which is affordable for them. If you can move into a place where you will be more financially stable, and you need to solve your debt issues quickly, this can be your best option. Additionally, this might be the only thing which saves you from bankruptcy or foreclosure.
  4. Finally, you may be forced into one of these options. Bankruptcy or foreclosure are sometimes incredibly difficult things to get through, but are sometimes the only option. If you are at the point where this might happen, consulting legal help is often the best choice. It isn’t pleasant, but it can be the thing which gets you away from an untenable situation.