How To Survive an Upside-Down Mortgage

Home Under Construction

Photo by melikirk2001, used with cc license

Actually, come to think of it, Frugal Freida should have called this “How To Survive an Upside-Down Mortgage or Two (or Three)!”

If you were part of the movement to (a) buy a house and (b) maybe get cash out of that house before (c) the market tanked and (d) your job prospects started to suck wind…Well, have we got a deal for you!

NO. WE DON’T HAVE A DEAL FOR YOU. There’s a difference between being FRUGAL – which is what we like here at New Frugality – and being CHEAP – which we don’t espouse.

That being said, let’s begin with this post and a few tips if you want to survive an upside-down mortgage.

  1. Beware of Scams
  2. We can’t stress that enough. There are scams out there – and you need to know the signs. If it sounds too good to be true, it likely IS too good to be true.

    To be more direct: if you owe $500,000 and your house is maybe worth $300,000, you should NOT have to pay any entity to get mortgage relief. In whatever form it takes, relief is one thing – and a pay-for-play scheme is an entirely different thing altogether.

  3. Patience, my friend, patience
  4. Rome wasn’t burned in a day. Or was it built in a day? In either event – if you aren’t going anywhere for awhile, you may want to ask about the long-term ramifications.

    It’s one thing if you’re looking to sell your home and use the proceeds to retire. It’s another thing altogether if you’ve got a few years before anything major happens. You may be better served just…well…waiting it out!

  5. More than one mortgage? Consider settling
  6. You’ll need tip number two – Patience, my friend, patience – and a little bit of luck.

    We’re not experts on the subject of settling 2nd or 3rd mortgages – so we’d rather suggest that you check out the forums on the subject over at LoanSafe. There are tons of resources that can help you – from real people who have actually gone through the process of settling a second or third mortgage.

  7. HAMP and HARP and MORE
  8. HAMP is the Home Affordable Modification Program. HARP is its sister program – Home Affordable Refinance Program.

  9. Be Prepared. And Be Creative.
  10. Time to toot our own horn for a second…Mike Acton’s post on Mortgage Rates and Refinancing was one of the most popular in our first month of business.

    So, in addition to checking that out to learn about your options, you may also want to figure out ways to ride out the storm. For instance, even if you don’t qualify for any of the Government programs, what about talking to your bank anyway? Maybe there’s a low interest rate possibility that lowers your payments AND allows you to sock some money away in the interim?

Remember to take a long-term view with your mortgage – and your life. Unless there’s something you absolutely HAVE to do in the next few weeks or months…do the math and see if you might be able to be where you are for a longer amount of time.

Anyone else waiting out their upside-down mortgage?

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About Frugal Freida

Frugal Freida is the archetypical New Frugality visitor - savvy, smart, social and aiming to help share her tips with the world.

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