What to Do When Your House Is Worth Less Than You Owe

Owning a home is supposed to be a good investment—but what happens when your home’s value drops below your mortgage balance? If you owe more on your mortgage than your house is worth, you're what's commonly called “underwater” or “upside down” on your loan.

It’s a tough situation, but you’re not alone—and you have options. At MG Property Bros, we help homeowners make smart, pressure-free decisions when facing financial and real estate challenges. Here’s what you can do if you're underwater on your mortgage.

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How Does a House Become Worth Less Than You Owe?

This happens when your mortgage balance is higher than your home’s market value. It’s often caused by:

• A housing market downturn
• Falling property values in your area
• Overborrowing through home equity loans
• Deferred maintenance or damage
• Buying at the market peak

No matter the reason, the result is the same: selling your home won’t fully cover what you owe.

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Your Options When You’re Underwater

1. Stay and Ride It Out

If you’re not in a rush to move and can still afford the payments, staying put is a valid option. Over time, your home may regain value and your equity could bounce back.

• Keep making payments
• Avoid refinancing unless rates are much better
• Consider renting it out if you need to relocate

2. Refinance (If You Qualify)

Some programs allow underwater homeowners to refinance at better rates, lowering monthly payments even if you don’t have equity.

• Look into options like FHA Streamline Refinance or VA Interest Rate Reduction Refinance
• Requires strong credit and consistent income
• Won’t reduce your debt, but can make it more manageable

3. Apply for a Loan Modification

If you’re struggling financially, your lender may agree to modify your loan terms:

• Lower monthly payments
• Extend the loan term
• Temporary payment relief through forbearance

This can help avoid default or foreclosure without having to sell.

4. Consider a Short Sale

If you need to sell but owe more than the home is worth, a short sale allows you to sell with your lender’s permission for less than the mortgage balance.

• Requires lender approval
• May impact your credit score, but less than foreclosure
• The lender may forgive the remaining balance or pursue a deficiency judgment—read the terms carefully

At MG Property Bros, we’ve helped homeowners navigate short sales by working directly with lenders and ensuring a smooth transaction.

5. Sell to a Cash Buyer (Even If You're Underwater)

Yes, you can sell even if you’re upside down. Some cash buyers—like us—can help negotiate with your lender, cover costs at closing, and help you avoid foreclosure or further financial strain.

• No agent fees, repairs, or delays
• We work with your lender to make the sale happen
• In some cases, we can offer creative solutions like subject-to financing or seller carry-back options

Why Work With MG Property Bros?

We understand that selling a home in this situation is emotional and stressful. Our team is here to:

• Help you understand your rights and options
• Make a no-obligation cash offer
• Work with your lender to avoid foreclosure
• Offer as-is sales with no closing costs
• Provide creative solutions to get you out from under the debt

We’ve helped many homeowners sell—even with zero equity or upside-down mortgages.

You’re Not Stuck—You Have Options

The most important thing to remember? You’re not powerless. There are real, actionable steps you can take to move forward—even if your house is worth less than your mortgage.

Let MG Property Bros help you explore the path that makes the most sense for you.

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