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Posted May 18th, 2012 under Underwater Mortgage

Relocating if You Have an Underwater Mortgage: Know Your Options

Tags: underwater mortgage, options for underwater borrowers, foreclosure for underwater homeowners

Relocating if You Have an Underwater Mortgage: Know Your Options

Imagine this: You've just been offered the job of your dreams, and you're ready to take the leap and move on the next exciting stage of your life. The only problem? The new job is in another state, and you're a homeowner with an underwater mortgage. It's a frustrating situation to be in, certainly, but don't despair. There are options for underwater borrowers who want to relocate.

Talk to your new employer. If you haven't already been offered relocation assistance from your new employer, considering asking for it. Relocation assistance or cash from a signing bonus could help you pay off your underwater mortgage and get a fresh start.

Negotiate a short sale. If you're underwater on your home and need to move because of a job, you may be able to get your bank to approve a short sale. You'll need to show the bank that holding on to the mortgage is a financial hardship, but the need to relocate for work usually qualifies. Of course, short sales have certain disadvantages, including the fact that they are often complicated and time consuming even at a lower price, it can still take months to sell your home. In addition, a short sale will hurt your credit.

Consider becoming a landlord. If you're not interested in selling your home right now, you might consider renting it out. In theory, having a tenant in the property could cover all or a portion of your mortgage expenses, and you can continue to rent the home until you feel that it's time to sell. Of course, becoming a landlord comes with some responsibilities, which may be hard to manage if you're not living nearby. In addition, renting out a home will affect your eligibility for certain types of underwater mortgage help. Before making a final decision about renting your home, it may be smart to seek some professional advice to make sure it's the best choice for you.

Think about foreclosure for underwater homeowners. In some cases, foreclosure may be your best, or only, option if you need to relocate and have an underwater mortgage. In a foreclosure, you stop making mortgage payments and let the bank take the home. Foreclosure for underwater homeowners allows you to escape from the burden of an underwater mortgage, but it come with some pretty serious consequences. Your credit score will take a big hit after a foreclosure, which will make it nearly impossible for you to buy another home, at least for several years. If you're hoping to buy another home in your new location, that's something to consider.

If you have an underwater mortgage and need to relocate, you have choices. But before making a decision about how to proceed, it's important to understand the options for underwater borrowers and their consequences. That's why we created the Underwater Homeowner Assessment and Action Plan. We'll walk you through the options for dealing with your underwater mortgage so that you're able to make an informed decision that allows you to move on to the next phase of your life with confidence.