Tips for Refinancing Your Upside-Down Mortgage

Tips for Refinancing Your Upside-Down Mortgage

Upside-down mortgages are becoming more and more common due these days due to the recent problems in the mortgage industry. It may be more difficult to refinance an upside-down mortgage, but it is not impossible.

The recent mortgage crisis has put many homeowners in a proverbial financial pickle - upside-down mortgages. An upside-down mortgage refers to a situation in which a homeowner owes more on their home than its actual market value. Because of this, refinancing an upside-down mortgage is often more difficult and it costs the homeowner more than a traditional refinance. With the following advice, however, you can refinance your upside-down mortgage without losing more money than you really need to.

1. Do some calculations. It's going to be very difficult to find a lending institution that will refinance your home if you are upside-down in your mortgage by five percent or more. As an example, if your home is worth $200,000 and you owe more than $210,000, you are upside-down in your mortgage by more than five percent. Most lending institutions won't want to take this financial risk.

2. Check the current interest rates. If you do find a lending institution that will refinance your upside-down mortgage, check the current interest rates before making your decision. The rates fluctuate and you could end up with a higher interest rate than you have right now. Depending on the difference in interest rates, you could be paying thousands of dollars more in the long run to pay off your mortgage than if you had just stayed in your upside-down mortgage.

3. Contact the federal government. There is help out there for homeowners who are in serious financial trouble. Contact the Federal Housing Administration (FHA) to see what resources you can take advantage of. For instance, you may be eligible for a second mortgage on your home which would cover the difference between your home's market value and how much you owe. As an example, if your home is worth $200,000 and you owe $220,000, the FHA may offer a second mortgage on the $20,000 difference so you can refinance the other $200,000 with a better interest rate.

4. Wait a couple years. Unless you are planning to move to another home in the near future, you might as well wait it out. The real estate market fluctuates over the years and this could just be a low point in your area. In a couple years, your home's value may go back up and you would no longer be in an upside-down mortgage. The value may even increase and you could make a profit if you waited until then to sell it. Just stay put and see what happens unless there is a reason for you to move right away.

An upside-down mortgage is nothing to be alarmed about if you are not moving. It's par for the course in the mortgage industry these days and thousands, if not millions, of homeowners have found themselves in this situation. Use some financial savvy and some patience to \"ride out the storm\" and make sound and rational decisions.

How to Purchase Bank-Owned Homes and Properties

How to Purchase Bank-Owned Homes and Properties

Have you been wanting to cash in on the latest mortgage crisis? If you know how to buy one of the many bank-owned homes and properties on the market, you can make a killing!

With all of the recent foreclosures and bank-owned homes on the market today, it's a great time to get a great deal. Many of these bank-owned homes are available for an incredibly low price if you know what to do to get your hands on one. Follow these steps to get a great house at a great price!

1. Call the real estate agents and the banks in your local area. These places typically have a list of foreclosed properties and bank-owned homes in the area. You can even start your search by visiting the websites of local real estate agents and searching the Multiple Listing Service, or MLS, on their site.

2. Search through the public records. The public records are usually located at City Hall or your county's courthouse and you can find financial information about the houses that you are interested in. This is where you will find out how much is owed in back taxes and if the property or home has any liens placed against it. Many of these expenses will be tacked on to the price of the house so you will need to make room in your purchasing price for these fees.

3. Crunch the numbers. Once you have decided on a property or a few potential properties, start doing some calculations so you can get the best deal. Determine how much the bank would have to sell the property for in order to come out even. Consider any repairs that need to be done in order to bring the house to code. Then, subtract the total of these fees and costs from the home's estimated value. That will give you a good price to start at when it comes time to negotiate a deal.

4. Contact the lender that owns the home you decide on. You want to speak with someone in the asset management department, the REO department or the bank-owned homes department. The name of the department varies by bank, but make sure you speak with someone who is involved with the homes that the bank owns. Ask to make an appointment so you can take a tour of the home or property you have chosen.

5. Start the negotiations. Once you have found a home that you want to purchase, make an offer to the bank. Typically, you will be dealing with the person who you spoke with when taking a tour of the home. Don't start the negotiations too low, but keep in mind the extra fees you will need to pay for repairs, liens and back taxes. Ask to have a purchase agreement written up and make sure the contract is agreeable before signing it.

Bonus Tip: Try to find a bank or real estate company that has many foreclosed or bank-owned properties available. They will usually be more willing to give you a bargain just to get it taken off their accounting books.

Five Facts about Reverse Mortgages

Five Facts about Reverse Mortgages

There are many myths and misconceptions going around the mortgage industry about reverse mortgages. Here are five important things you should know about them when deciding if one is right for you.

Reverse mortgages are becoming more and more popular among senior citizen homeowners because of the freedom and convenience that they offer. Basically, reverse mortgages allow homeowners to withdraw equity from their home in order to supplement their income. As a result, seniors who participate in a reverse mortgage have more money for bills and for enjoying their years in retirement.

Three Types of Reverse Mortgage

There are three basic types of reverse mortgages that senior homeowners can take advantage of.

The single-purpose reverse mortgage is the least expensive and it is designed for homeowners with a moderate income. Unfortunately, it is not available in all states.

Proprietary reverse mortgages are more expensive than a traditional home loan but there are no restrictions on income, medical requirements or purpose.

Federally-insured home mortgages are very common and they are backed by HUD. If a homeowner chooses this type of reverse mortgage, however, the federal government requires them to go through counseling where a qualified counselor will explain the obligations of the mortgage to the homeowner. The homeowner must receive a \"certificate of counseling\" before their loan can be processed.


Payments for your reverse mortgage can be made to you in several ways. Many homeowners take their payment as a lump sum. Others prefer to receive a monthly payment for as long as they live in the house. Still others choose to take cash advances while leaving the rest of the money in the bank. Homeowners involved in a reverse mortgage can choose either of these options or a combination of them to suit their individual needs.

Qualifying for a Reverse Mortgage

Generally, any homeowner over the age of 62 can qualify for a reverse mortgage as long as they own their own home. If the homeowner does not own the home outright, they must pay off the mortgage with the funds from the reverse mortgage. The home they get the reverse mortgage on must be their primary residence, too.


When a homeowner has a reverse mortgage, they are not responsible for repaying the loan as long as they live in the home. However, they are still responsible for other expenses incurred as a homeowner, including property taxes, insurance, repairs and maintenance.

End of the Reverse Mortgage Loan

A reverse mortgage ends when the homeowner either sells the house or passes away. In some instances, the reverse mortgage may also end when the homeowner is no longer able to live in the home for at least 12 consecutive months. This often occurs when the homeowner moves into an assisted living facility or when they move in with a family member because they can no longer take care of themselves. The home can then be sold and the loan can get paid off by using the proceeds. If the homeowner has died, the heirs can refinance the home with a traditional mortgage or they can receive the money left over once the mortgage has been paid off with proceeds from selling it. If the proceeds of the sale do not cover the mortgage, the lender simply absorbs the loss.