Q&A: What options are available for those of us paying our mortgage but hm is now worth less than the borrowed amt?

Question by Krista C: What options are available for those of us paying our mortgage but hm is now worth less than the borrowed amt?
I bought my home 2 years ago for $ 339,000, it was appraised at that time at $ 375,000. Now, only 2 years later it is only worth $ 275,000 according to Zillow.com. My husband and I are doing everything possible to pay the mortgage, cutting back on other things to be able to keep our home. So what government stimilus is available for those of us who are still paying the mortgage on the original home value? Shouldn’t we be able to refinance at the valued home price?

Best answer:

Answer by acermill
Of course not. Why should the lender swallow a $ 64,000 loss just because your home value decreased? That you are struggling to pay the mortgage has no bearing on the current value of the property. Were the property still worth $ 340K, you would STILL be struggling to make the payments.

As well, you might consider that Zillow can be anywhere from very accurate to 40% off on home values. The only way to know what your house is worth is to have it professionally appraised at current market value.

Know better? Leave your own answer in the comments!

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3 Responses to Q&A: What options are available for those of us paying our mortgage but hm is now worth less than the borrowed amt?

  1. Real Estate Guy says:

    “HOW DO I GET MIND . . .

    Zillow is crap.

    2nd, what should be done? Really? You purchased a house. You knew what the payments would be – so pay what you promised.

    If the property was worth more then you purchased, would you work harder to pay your bills? Sure! And would you want to give some of the equity to the government?

    The government is not in the business to promise that you make good decisions or bail you out when you didn’t.

  2. Rush is a band says:

    Zillow isn’t an appraisal. They are notorious for being inaccurate. Forget what you read there.

    I don’t believe there is any help for people like you (and millions like you) and to be quite honest I don’t think there should be.

    Your option is to keep paying as agreed or be subject to foreclosure and repossession. There is no stimulus or help for someone’s whose house has decreased in value but who can still afford the payments.

    Here’s the situation. You agreed to purchase a property for a certain dollar amount. You agreed to repay that money when you signed your loan documents and you even agreed to the payment amount. You didn’t agree to pay if and only if the property stayed at the current value or increased, did you? No, you agreed to pay. If you could sell for $ 100,000 more than you bought it for, would you give the bank that loaned you money an extra $ 50,000 when you sold? You wouldn’t? Why are you asking them to take a loss? yeesh.

    No, refinancing at the current home value would require someone (a bank) to take a loss. Probably a very large loss. This would extend, prolong, exacerbate, make worse, etc., the current financial crisis.

    No one guaranteed that your house value wouldn’t decrease. It is like any other investment. You bought it and you are responsible whether it goes up or down in value.

    good luck!

  3. Lisa S says:

    The information you’ve been offered so far is sound.

    The down side of buying during a boom is exactly what you are experiencing. You can try to refinance—which might lower your interest payment, but otherwise, the loan company is not bound to assist you.

    My suggestion is that you pay down extra on the principal, and try to ride out the market. You won’t be able to sell for a while, with the glut of homes on the market, so your best position is to sit tight, and wait for things to level off.

    I know its tough—but real estate is one of those things that is a long term proposition…and “flipping” will prove too costly to be worth the effort.

    Good luck with this.

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