Your Home is worth less than your Mortgage… Now what?
This situation doesn’t happen very often, but it does happen; Home owners find themselves owing more than their home is worth!!
How does it happen?
First let’s just admit, you can’t always plan for it!
If your local real estate market is hot, or mortgage interest rates are low, it can very be tempting to get in over your head!
Maybe you are a new buyer putting the minimum required as a down payment, and then the real estate market falls!
Or you just refinanced your home, and then the market shifts and what equity you did have, is now gone!
Regardless of how it happened, you need to know what to do next!
What can you do when you find yourself underwater?
A negative equity situation is stressful enough on its own, but it can also have consequences for other decisions in your life.
- You may not be able to sell your home because the money you’d get from the sale wouldn’t pay off your mortgage. You’d have to come up with the difference.
- Not being able to sell your home might mean that you can’t make that move to a different city to take advantage of a job offer or to be closer to loved ones.
- When your mortgage comes up for renewal, options will be limited. It’s harder to negotiate with your existing lender for better rates or conditions.
- You will not be able to go elsewhere. When you are underwater no other lender will be able to assist you.
How does negative equity impact other decisions?
If you are unfortuante enough to end up underwater, you will need to consider your overall situation carefully.
Try to determine what has caused your negative equity. Basically, is there’s anything you can do personally to turn it around.
- Are you extended too far financially? Can you pull back?
- Are you spending too much and racking up debt that you are refinancing into your mortgage? Can you control your spending?
- If you stop spending elsewhere, can you increase your mortgage payments even slightly?
If you are underwater because your mortgage is new or market conditions are simply what they are, do what you can to tighten up your budget a little and increase your payments in even the smallest of ways.
Regardless of the reason, the likelihood is that you are not alone, don’t be embarrassed, call your trusted Mortgage Broker, that’s what they are there for, to help you find solutions to save your home!
For all your home financing needs, please feel free to contact me any time.
Meghan Van Houten – Mortgage Agent, Level 2
Mountainview Mortgages – The Mortgage Centre
5038 Fairview Street, Burlington, ON L7L 0B4
Independently owned and operated