What are the best strategies for getting back above water?

Asked by George Holmes, Walls, MS Sat May 5, 2012

Should I just pay down the principal now or just wait and save my money? Should I keep making upgrades and which upgrades are best? I need an appraisal to know how far under water I am but I'm thinking ~$15,000.

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Dan Tabit’s answer
Dan Tabit, Agent, Issaquah, WA
Sat May 5, 2012
George,
Your value relative to your loan is only an issue if you want to sell or borrow against your home. If you believe you are only $15k from being above water, then you are in pretty good shape compared to many others.
The answer to your question depends on your long term plans. Upgrades made today will be dated and worth less in 10 years. If you hope to sell soon, then it depends on your market, the upgrades and degree of need.
A fully functional kitchen may cost more to upgrade then it will repay. A badly dated or dysfunctional kitchen may be a huge hindrance to selling.
If you plan to stay a while, do the necessary maintenance and pay down the mortgage. If your rate is high there are options to refinance now that you should consider, even in your current status. Just consider whether you want to start with a new 30 year loan or to do a shorter term like 25, 20 or 15. You'll make more progress faster with a shorter term.
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