Is Your Home ‘Under Water’?

8224569761_fd4d816a21_zImage Credit: StockMonkeys.com

The loss of 1,300 jobs in New Jersey this March, means that New Jersey’s job market is once again in a slump. When compared with New York, New Jersey has had a very weak recovery from the recent recession. NJ lost around 258,000 jobs during the recession, and has only been able to recover around 36% of those jobs.

Because of this and several other factors, many New Jerseyans continue to struggle financially, with some families living off of unemployment checks or much lower salaries than they were accustomed to before the recession hit. The financial struggles faced by many new Jerseyans means that they are struggling to pay their bills and make good on their debts.

Reports now show that almost 20% of New Jersey homes are considered ‘underwater’ in terms of equity.

What that means is that more homeowners are falling behind on their mortgages, unable to keep up with the high payments due to the “economic pause” that’s occurring in our state along with several other states in the US.

Those homeowners who feel like their house is “underwater” regarding equity, are forced to consider losing their home to a foreclosure. However, because foreclosure is so devastating to a credit score, other options should be considered before going down that road.

Two good options for struggling homeowners are: deed in lieu of foreclosure and short sales.

A deed in lieu of foreclosure involves the homeowner voluntarily relinquishing their home to the bank or lender in order to have the loan canceled. The bank takes ownership of the home and does not pursue foreclosure proceedings. Additionally, if any foreclosure proceedings have already been started, the lender in this case agrees to put a stop to them. In a deed in lieu of foreclosure, some lenders will forgive deficiencies (overdue or late payments), and some will not.

Another option for homeowners who are trying to swim to the surface and get ahead of their debts, is to sell the home as a short sale. A short sale must be done with the permission of the bank or lender, as they will be agreeing to take less money than is currently owed on the property. Often, the difference is forgiven, allowing the homeowner to walk away after the short sale, and work on rebuilding their credit without an overly expensive mortgage hanging over their heads. It is an important to make sure that you are clear on all of the terms of your short sale before you sign any documents. Homeowners must be sure that the deficiency balance is not going to be their responsibility.

Remember, there are options that can help you get out of the unfortunate situation you may have found yourself in. At Veitengruber Law, we can help you decipher the differences between a short sale and a deed in lieu of foreclosure so that you can make the best decision for your life and circumstances. We negotiate with your lenders for you. Get out from underneath a sinking property now! Give our office a call – we’ve helped many like you and we guarantee that we can help you as well.

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5 Responses to Is Your Home ‘Under Water’?

  1. Pingback: Can My House be Sold at Sheriff’s Sale in the Middle of Winter? | Veitengruber Law

  2. Pingback: Buying, Selling and Keeping Your NJ Home | Veitengruber Law

  3. Pingback: What is an Underwater Home? | Veitengruber Law

  4. Pingback: After the Short Sale: What is a Deficiency Judgement? | Veitengruber Law

  5. Pingback: Am I Risking Foreclosure for Non-Payment of a Home Equity Loan? | Veitengruber Law

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