(Ask your financial questions in the comment section below for Dr. Finance to answer!)
Mrs. Blanch Gladstone asks: Our home is worth less than what we owe on it. What can we do?
Dr. Finance responds:
Dear Blanch, this is a very timely question that affects many Americans today, as well as numerous illegal aliens. You have what we call an upside-down home loan mortgage resulting in negative equity.
When you owe more than your home is worth, you could either decrease the amount you owe on it, or do things to increase the value of your property. Since it’s difficult to decrease the amount you owe, and because refinancing is probably not an option, let’s look at some things to increase the property’s value:
- Add a bathroom or two and possibly some granite countertops
- Push to have a new school built in your neighborhood by attending local school board meetings
- Paint your home a wild color and creatively market the house as being “haunted”
- Since you’re trying to stay “afloat” with your “underwater” mortgage, you might want to add a swimming pool!
Otherwise, you might want to:
- Sell your place at its appraised value and “owe the lender” the difference
- Just walk away and change your name
- Allow a foreclosure and hope for the best
- Declare bankruptcy and hope for less than the worst
- Try to sell at the highest possible price point by having an on-line auction via eBay
- Start a church (like I did) and gain some nice non-profit tax benefits, plus the weekly cash-flow from the offering plates
- Sell raffle tickets for some lucky person to win your house, (and whether or not you actually pick a “winner” is totally up to you)
- Increase your monthly cash-flow by either turning your garage into a multi-person bed & breakfast, or get a part-time job as a fast-food sales representative.
Now Blanch, if all else fails, try writing a long letter to our friends at the Federal Government and hope like hell that they give you some basic assistance through the Home Affordable Refinance Program (HARP). However, the chances of this happening are slim to none if you voted Republican in any of the recent elections.
If I may close with a famous quotation from the venerable Franz Kafka: “So long as you have food in your mouth, you have solved all questions for the time being.”
(Feel free to ask any financial questions that you may have in the comment section below for Dr. Finance to answer.)
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Contributing writer since January, 2013. I've been described by myself as a piano-playing omnivore who hates typos but loves chocolate milk in his coffee. As a Life Coach, some lessons I like to pass onto others are: 1. don't stare at strangers, especially in jail, 2. don't leave fun to find fun, 3. never pet a burning dog, 4. don't eat more than you can lift, and 5. when in doubt, jot it down. Click on any picture in my posts to see them in their full glory. All have been tweaked with either PicMonkey.com or Pixlr.com/Express.