A decade ago, many people probably did not even know what the term "underwater" meant in reference to a mortgage. Now, nearly everyone has heard about underwater homes, and many in the South Florida community are themselves underwater on their mortgages.
In 2005 and 2006, the housing market in South Florida hit its peak. Eager investors snapped up properties, thinking that prices would continue to rise. Unfortunately, the average home prices in South Florida have fallen by about half since then. And the people who purchased those homes five and six years ago have found themselves with few choices.
Sometimes people purchase a home with the goal of staying in it for decades. However, many people buy a home without knowing what the future holds. Job offers in other states, family needs and other situations often prompt homeowners to sell their property and move elsewhere. With underwater mortgages, many in South Florida feel trapped.
The South Florida Sun Sentinel recently reported on a couple who purchased their home in April of 2006. At the time, they couple paid $243,000. Today, the same property is worth only $96,840. They would lose nearly $150,000 if they tried to sell the home now. The man would like to pursue job opportunities in Georgia, but they feel that they cannot consider moving while they are so far underwater on their mortgage.
The options for this couple and other homeowners who owes more than their properties are worth appear dismal. They could:
- Continue to make payments
- Find someone to rent the property
- Convince their lender to agree to a short sale
- File for bankruptcy
- Default on the mortgage and let the lender foreclose
These options rarely appeal to homeowners, and it can be difficult to decide the best course of action. That is when speaking with an experienced bankruptcy and foreclosure attorney can be most helpful. Homeowners should know that they do not have to make these difficult decisions alone.
Source: Sun Sentinel, "Homes bought five years ago the hardest to sell," Paul Owers, 17 March 2011