How to Relocate When Upside Down on Mortgage

Relocating when you are upside down on your mortgage can be challenging. The upside down nature of your mortgage means you owe more on the loan than the house is worth. That makes selling the house difficult, yet you may need to relocate for a job offer or other reasons. It's important that you carefully consider all the pros and cons before you leave the house behind. Otherwise, you may discoverer that your budget in your new city is insufficient to cover both your new living expenses and the mortgage on the house.

Instructions

1

Learn how much your house is worth by asking a real estate agent. Have an agent compare your house to similar homes that have recently sold in your area. Subtract the current fair market value from the balance on the loan to show how far underwater your mortgage is.

2

Gather financial information needed to create a monthly budget for your new life after you relocate. Make some judgments on the new cost of living based on personal research. Also gather billing statements on all current debts, and make a list of other recurring expenses such as child care, groceries and utilities. Looking at your current budget and a potential new budget after the relocation will help your decision making about what to do with the current mortgage.

3

Solicit advice from a housing counselor approved by the U.S. Department of Housing and Urban Development. The counselors have experience working with homeowners who are upside down on their mortgages. Ask the counselor to review your finances and budget to suggest changes that might make the relocation easier. Also ask for the counselor's professional advice on what to do about the upside down mortgage. Find a counselor near you by checking the HUD website (see Resources).

4

Rent the house. Consider hiring a local property management company to handle the process. Renting the house will allow you to receive at least a portion of the monthly mortgage payment. Be sure to account for all expenses, such as the management fee and maintenance as you decide on this option. Check your budget to determine if you have the flexibility to make up the monthly difference between the rental income and expenses and the mortgage payment.

5

Ask your lender for permission to sell the house through a short sale if renting it is not a viable option. Short sales allow for the house to be be sold for less than the amount remaining on the loan. However, the lender must agree. Have the housing counselor contact the lender directly to negotiate on your behalf. Then hire a real estate agent with experience handling short sales.

6

Get details of the short sale agreement with the lender in writing, including a stipulation that you will not be held responsible for a deficiency balance -- the amount remaining after the house is sold for less than the balance due to the mortgage company.