The fourth quarter of 2016 showed great promise as CoreLogic reported a decrease in the number of underwater homes across the United States.
Over 1 million then-underwater homeowners have resurfaced out of negative equity in that time. There is an increase of 11.7 percent in home equity in 2016 compared to the year before. In figures, that is about $783 billion worth of home equity.
Now, homeowners with positive property equity rose to 93.8%. While this is a fairly high number, it wouldn’t hurt to list down some effective tips to help the 6 % who are still underwater.
Rent a room out
You have a vacant room with shelves collecting dust and shutter blinds closed for eternity. What you fail to see is an income-generating potential!
The cash you get from renting out a room – or two – can help you supplement the debt and mortgage payments. If you’re not up for having some random stranger living in your house, try AirBnB. It’s like turning your home into a ‘hotel’ with homey accommodation to offer transient occupants.
This isn’t an easy feat, but it can be worth a try. Short-selling means selling the property for a price that is less than what you owe. You can sell the home for an aggressive price to help attract a buyer and, eventually, have it sold. This can be challenging, the lender has to approve on any offer you get because it is them that would take the loss once the property is sold.
Refinancing can help you lower the current interest rate and lower the mortgage’s monthly payments.
To get approval for a refinance, you have to grow your equity to at least 20 percent for the lenders to approve your refinancing application. With an underwater mortgage t, it won’t be an easy task. HARP, or the Home Affordable Refinance Program, of the federal government, aims to help underwater homeowners.
Selling your home when you’re underwater may mean losing a huge amount of money. If you don’t have any grave reason to move out, say job relocation, the best choice is to stay there.
Continue paying the home forward. If you are planning to sell the home, wait until you’re cleared of your debts and your equity broke even.
Get a second job
Let’s face it, many refuse to have one more job because of pride. But if you have all the right reasons to have one, maybe it’s time that you reconsider.
Yes, you have a full-time job. And, yes, you’re already tired. But if a little sacrifice can put an end to your negative equity, then you’re doing it for something important. And if you really don’t like to juggle two jobs, think about it as a temporary set up until you are cleared your mortgage debt.
Being underwater is hard. But this shouldn’t stop you from trying to gain equity. If you’re unsure of what steps to take, talk to different home financing professionals. They can assess your situation and give you viable options to help you move out from being underwater.