If you have ended up underwater on your mortgage, then you know how stressful it is to know that you owe more on your house than it is worth. If it is any consolation, there are millions of Americans just like you that are in the exact same position.

With the downward trend that has taken place in the real-estate market recently, many people are finding that they are in upside down mortgages… so what are they doing about it?

Well, some people are walking away from them. They are simply letting them go back to the bank so that they can find some place cheaper to live. Many of these homeowners feel that placing good money after bad money is not a wise idea and especially if their homes may never recover.

This might seem unwise at first glance, but it can be a move that saves a lot of money if done at the right time. Of course, you should consult a lawyer before doing this so as to make sure that you are not liable. 

The most popular option here on LoanSafe and in the forum is the loan modification. This is when your current lender modifies your mortgage interest rate in order to make your home more affordable. Some members here have seen rates as low as 2-3% on their mortgages and even though they are underwater, they feel that it is a worth while trade and they are willing to stick it out in their home, their American Dream.

Other options include refinancing, debt consolidation, and some other choices like them. The only problem is that it is hard to refinance when you are underwater if you don’t have a large sum of cash sitting around, which is why a lot of people are having trouble doing it.

Most people are either just sticking it out, trying to make the payments… or walking away, leaving the bank deal with a huge, empty house. Sometimes they stay in the house as long as they can without paying, so that they can save up enough money to move. But then there are those who refuse to do this, citing paying their mortgage as the right, moral thing to do.

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My name is Maurice “Moe” Bedard. I am the founder of America’s #1 Mortgage Forum, LoanSafe.org. My online work has been featured in the New York Times, LA Times, Fox Business, and many other media publications.

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