What if your home is worth less than what you owe by $25 or $50,000? Bought house for $425,000 wih $100,000 down and a $325,000 mortgage. Thank you.

Asked by Joebuyer, Manville, NJ Wed Mar 9, 2011

So my home is worth from $225 -$325,000 with an interest only mortgage that changes monthly. Would like a fixed rate mortgage but don't know how to approach the mortgage company.

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Maria Lainez’s answer
Maria Lainez, Agent, Belle Mead, NJ
Thu Mar 10, 2011
My response of contacting different lenders is not for modification, modification can only be done with your lender. Contacting other lending institute is for refinancing, some companys are offering great refi deals. Sorry if you misunderstood.
0 votes
Audeliz Angie…, Agent, Westfield, NJ
Wed Mar 9, 2011
Hi Joe,

I am a little concerned over the advice Maria gave below with regards to contacting more than one lender for a loan modification. I was under the impression that you have to contact your lender directly and ask for their:

a. The Lost Mitigation Department
b. Loan Modifications
c. Home Retention Department, Counselor

Different banks call it different things.

I am also concerned about how you know your home has lost that much value since when you purchased the home. (My best guess would be that you went on to zillow or something like that which is highly inaccurate) If you spoke to an agent and they gave you a better idea of what your home is worth, then that would be a more accurate reflection of your market value.

Next, the most important thing for you to do as you negotiate with the bank is to be prepared for the documents the bank will require you to mail or fax in as well to be prepared for a phone interview.

Here's what you will need to have:
1. Hardship letter
2. Two most recent bank statements and paystubs
3. W2 or 1099s from 2010, 2009, 2008, possibly 07 (if you are self-employed, then a P and L).
4. List of household expenses

It's not an easy process. I have negotiated directly with more than one lender for clients in the past. What matters most is whether or not the bank believes you can make reduced payments and if your ratios put you with the guidelines for a modification.

Also, this excel file will help you get organized a personal budget: http://njretoday.com/?attachment_id=764
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, ,
Wed Mar 9, 2011
There are some banks that would do the loan even if the home is worth slightly less than your mortgage amount.

The bank you currently have your mortgage with is your best bet but feel free to call me at 908-415-3958 if you are having a hard time getting answers.

Good luck!
0 votes
Maria Lainez, Agent, Belle Mead, NJ
Wed Mar 9, 2011
When you contact your mortgage company ask for the loan modification department. When you speak to them you tell them that because of the market and the structure of your loan you are confronting financial hardship and you would like to modify to a fix rate. It normally would not cost you nothing or little money. Give me a call and I would be more than happy to walk you through the process. Have done it for several clients. If you have good credit, you can contact several lenders and get the best deal. Call me at 908-963-4595. Maria
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Tim Moore, Agent, Kitty Hawk, NC
Wed Mar 9, 2011
You need to find out how much it is worth. If it is less than the amount you want to mortgage it for then you are upside down and the lender will not likely want to do the loan. Your options are:

1. leave everything as it is, rates are not going up

2. refinance if your house is worth more than the amount owed

3. pay more down to reduce the amount you need to mortgage

4. find out how to short sale your house - you need to be behind on payments and have a hardship other than being upside down

5. sell it
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