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Over 80K underwater on my house What should I do?

Hey everyone,Well, I really don't know where to start. I bought my house almost 4 years ago for what seemed like a decent price back then. After the downturn, the value of my house is now almost $80,000 less than what I owe on it. I have paid my mortgage faithfully and on-time every month since my purchase. I have come to the realization that I am never going to be able to sell this house for anywhere even near a break-even amount. So after talking to many friends and co-workers, the consensus seems to be to stop paying the mortgage and try to get out from under the house.I don't know what to do. I can afford to continue paying the mortgage, but it seems a futile effort seeing that I will never be able to sell the house and be out from underneath it. What bothers me the most, is that I used my VA benefits to buy this house, and if I lose it, I think I lose the ability to use VA benefits again. I would like to get out of this house at some point and move into a larger home that fits my families needs better, but I don't know how to do it.Any ideas? Anything will help. Thanks guys/gals by billgr_857_962 from Boulder, Colorado. Feb 17th 2012 Reply


Mike Trenkle (MikeT@MKMortgageGroup.com)
#23 ranked lender in Colorado - 12 contributions

Hello, There are possibilities to refiance your home even if you are in a negative equity position. Fannie Mae and Freddie Mac as well as the FHA have options for people in your position.Feel free to call me and I can answer any of your questions in more detail.Mike TrenkleMK Mortgage Group LLC303-537-4539

Feb 17th 2012
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David Widlund (david_283_200)
#46 ranked lender in Colorado - 7 contributions

It doesn't sound like Bill is asking about refinancing. I think he is asking how to get out from under his house or to buy a new, larger house. The only answer I can come up with is to keep paying on your home, even increasing the amount of your payment to get closer to having equity. Eventually the value of the home and the size of the mortgage will meet in the middle and you may be able to sell your home at that point. In order to buy a new home while you still have this one, you could rent your existing home for as much as the market will bear, save as little as 3% for a down payment on a conventional loan and purchase while the previous house gets gradually paid down. I cannot recommend stopping payments on your house now. If you go in to foreclosure you will become a renter for at least 4-5 years. I doubt you will find your dream house on the rental market. You will also ruin your credit for all other accounts. No more credit cards, car loans, gas cards or anything else for many years.If you felt like your home was a good value 4 years ago, you likely believe it is still worth what you paid. You just have to wait until the market improves in order to sell it. Just like your 401k, you only lose money if you liquidate it while the market is down. So while you may be ready to be done with this house, it's not quite done with you.Good Luck!

Feb 17th 2012
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

If you walk away from your VA loan, you can purchase another home 2 years later with VA, however depending on your circumstances, you might have to pay back a portion of the loss to VA in order to restore your benefits. A better option is to look into a VA Streamline refinance at 15 years. Current interest rates are about 2 points lower than they were 4 years ago. By going 15 years, you can lower your principal balance in huge chunks every year starting with your very first payment. You will be in an equity position much quicker... contact a local mortgage broker, not a bank, and apply with them.. They can look at your complete profile and type up several loan options for you to make an informed decision. WilliamAcres.com

Feb 17th 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,827 contributions

Sadly, your situation is all too typical. It may seem easy to just give it back to get out from under the deficiency, but because you used your VA eligibility, doing so is going to hamper your ability to obtain a new loan, VA or otherwise. It may make more sense to hang on to the existing home, converting it to a rental and buying a larger home that is more suitable for your current family size. As the housing crises and resultant solutions continue to evolve, there may be additional options, including principal reductions in the future. ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Feb 17th 2012
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Nic Netherton (ColoradoLender)
#18 ranked lender in Colorado - 57 contributions

Hello-Have you looked into refinancing the VA loan to a lower rate to make it more affordable? The fact that your current loan is a VA loan means you can do a streamline refinance without an appraisal to lower the rate and payment. Call me at 970-590-5021 and I would be happy to walk you through the process. As long as you stay in good standing with the VA you may be able to use your VA eligibility in the future again to buy a larger home to fit your families needs. Talk to you soon, thanks. Nic Netherton, Colorado.

Feb 17th 2012
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