In the world of real estate, you might hear the phrase “underwater on your mortgage”, or someone might say they’re “upside down on their house,” or “owe more than it’s worth.” These all mean the same thing:
You owe the bank more than what your home is currently worth.
This can happen for a few reasons. Maybe the market dipped, maybe the home needs serious repairs, or maybe you bought during a high and values have since cooled. Whatever the reason, it’s a tough spot to be in… but it’s not hopeless.
What Happens If You Stay Underwater?
Staying underwater and continuing to fall behind on payments can dig a deeper hole. Here’s what that path typically looks like:
- Missed payments turn into late fees.
- Late fees pile up and hurt your credit score.
- Eventually, the lender starts foreclosure proceedings.
And once foreclosure starts, the clock is ticking. Most homeowners don’t realize that the average American still has over $270,000 in home equity (per 2023 Federal Reserve data). But in foreclosure? That equity disappears. The bank seizes the home, sells it (often for a discount), and keeps the proceeds to cover what they’re owed.
You walk away with nothing.
Why Holding Out is a Costly Mistake
We’ve seen homeowners try to ride it out, hoping the market bounces back or that they’ll magically catch up on payments. In reality:
- Interest and penalties add up.
- Maintenance gets ignored.
- The property condition declines, lowering the value further.
- The emotional toll of uncertainty weighs heavy.
By the time they’re ready to take action, it’s too late. The foreclosure clock has run out, and any options they had are gone.
But Here’s the Good News—You Can Still Sell
Even if you’re underwater, there are still ways to avoid foreclosure and move on with dignity:
- Short Sale: With lender approval, you can sell the home for less than what’s owed. It’s not perfect, but it’s a whole lot better than foreclosure.
- Cash Investors (Like Us): We work directly with distressed homeowners, helping negotiate with the bank when needed, and make offers that can stop the bleeding fast.
- Novation Agreements: In some cases, we can rehab the house ourselves, find a buyer, and pay off your lender without you spending a dime.
Time is of the Essence
If you’re even slightly behind or know you’re underwater, don’t wait. The sooner you act, the more options you have.
The longer you wait, the more leverage the bank gets, and the less likely you are to walk away with anything.
If you’re in Cleveland, Parma, Maple Heights, or anywhere in Northeast Ohio and you’re worried about being underwater, give us a call.
You have more options than you think, and we’re happy to walk you through them.
