Upside Down Mortgage

Upside Down in Your Mortgage

What does it mean to be upside down in your mortgage?
Have you ever heard the term “Upside Down Mortgage?”

If you are like the average homeowner in America, you have a pretty bad habit of growing your debt that leads to being upside down in your mortgage.

This terms simply means that the amount of debt owed for your home is larger than what the home is worth.

For instance, if you paid $100,000 for your home, but your property value immediately went down for some reason and an appraisal now says it’s only worth $90,000, then you are upside down in your mortgage by $10,000.

This is a bad position to be in for two reasons.

  1. It will take you 10% longer to pay off your debt than it would someone who bought the house next door for $90,000.
  2. If you have to sell it for some reason in the near future, you can’t! The best you’re going to get for it is $90,000 but your lender will demand $100,000!

Having an upside down mortgage is a real American curse, which has lead us to the worst ever foreclosure rate in the planet’s history! Most other countries don’t allow lenders to lend homeowners a penny more than their property is worth, but for some reason, there is no such rule in America. –Land of opportunity and all of that, I guess…

The two most common reasons for Americans to go upside down on their mortgage are:

  1. They had good credit so the bank let them borrow up to $120 what the house was worth.
  2. Their bad credit got them a high interest rate loan, and they couldn’t pay it off fast enough. So the principle amount grew larger & larger!

So if your mortgage is upside down, do whatever you can to get out from under it… You never know when some kind of cashflow emergency is going to strike (like job loss, hospitalization, tornadoes, theft, kidnapping, etc.) and if you start missing payments on your upside down mortgage you will soon find out how horrible life can be!

Lenders have been known to harass you on a daily basis, even at your front door. Even worse, if you are upside down on your mortgage and they evict you, that won’t cover all of your debt… So guess who they are going to try to sue in order to make up for that lost profit?

If you are upside down in your mortgage at the time of foreclosure, most states will allow them to even sue a homeless person!