Still Upside Down?
The real estate market in San Diego has certainly jumped back since the great Recession. However, there are still areas within the County that have yet to make a full recovery, and depending on when you purchased and what you paid, you may still be upside down, owing more than what your home is currently worth.
If you are currently able to make your payments, have no reason that you need to move, and your negative equity is relatively minor, say $10K, it is probably wise to hang tight as we will continue to see appreciation over this next year. If you owe $10K more than your home is worth at 5% you’re paying roughly $107 a month to chip away at your negative equity…not too terrible. However, if you’re underwater by $75K you’re paying about $400 a month that is really going no where. Probably better to have that money going into an investment that will at least have a positive return.
So is a short sale a possible option? Maybe. Back in 2008 and 2009 when short sales were a large percentage of the market, lenders were reluctant to allow a mortgage holder out from under their original debt unless there was severe financial hardship, and even then, they often extracted a promissory note meaning that the poor borrower was still on the hook for the total loan amount. But times have changed, and as the market has strengthened more and more lenders are allowing a seller to sell for less than owed strictly on the basis of the negative equity.
Steele Group Realty has been negotiating short sales since 2009 and has successfully closed 95% of all our short sale transactions.