What if I start to fall behind on my mortgage payments? How much will I lose if I have to sell?

“We’re sorry, but the only answer is that there is no “best” answer.  So much depends on individual circumstances that we cannot give a one-size-fits-all suggestion for relief.  Here are several of the factors that you must evaluate:   

1. Is my house worth less than the combined value of the mortgage debt?   

2. Does my immediate neighborhood have one for sale sign for every 50 houses or is it more like eight or ten per 50?   

3. Does my lender have any type of “rescue” program for people in my situation?   

   “If your lender will renegotiate your loan(s) to a payment schedule you can afford, start renegotiations at once!    “If you determine that there is no renegotiation to be had from your lender(s) and if your house is worth more than the value of the mortgage encumbrance(s), seriously consider listing your house for sale before further market erosion reduces the value below the mortgage-plus-closing-cost amount.  To help you guide yourself through this calculation, recognize that your closing costs are going to be about seven percent of selling price.    “If, on the other hand, you home is already worth less than the amount that you owe, you need to get into a “short-payoff” listing and sale as quickly as possible.  In a short payoff, the lender agrees to accept less money than is owed.    “As to the issue of loss of your home’s value, that too has no single answer.  Various surveys suggest that California has suffered about a 10% decline in home value 2007 vs. 2006.  But all real estate is local: there are portions of Los Angeles County in which values have actually increased slightly in the past year while other areas have seen a loss of more than 20% from the 2005-06 peak value.  You’ll need to have a comparative market analysis done to determine the current value of your home; ask more than one real estate agent to provide a price opinion so that you have a point of reference.    “None of this is very comforting, but these are not comforting times in the real estate market.  Seek the best advice you can get from trusted advisors (tax, real estate, maybe even legal) and decide a course of action.    “And remember, the value of you home is not what it was a year ago, not even three months; if you must sell, get ahead of the market, price below the competition and keep your dwelling as attractive as possible during the listing period.”