Real Estate Matters
www.reporterherald.com • Saturday, December 10, 2011 • Reporter-Herald
Is it smart to pay down principal on underwater loan? ILYCE GLINK TRIBUNE MEDIA SERVICES
Q
uestion: I cannot find a straight answer to this anywhere. Is it worth paying extra on the principal on our loan if my home is underwater? We plan to be in the home for at least five more years or until we can sell easily. Right now it seems like throwing good money after bad if it will still take years to gain equity. Would I be better off investing or saving that money now? Separately, are there any underground rumblings or things on the horizon for homeowners that are underwater and don't qualify for HARP or HAMP? I, like thousands of others, don't meet the extremely rigid guidelines because I pay private mortgage insurance. I had heard there might be help coming. Is that true? Answer: You raise a good question on whether you should pay down the principal on your loan if your loan is underwater. The short answer to that question would depend on what your financial situation is and what it will likely be in the future. If your financial situation is strong, and if you had to sell your home for less than you owe on it, would you have the financial means to pay the lender the deficiency from the sale and preserve your high credit score and great credit history? If the answer is yes, you would pay off the lender in full, then paying down your loan would be a hedge against having to come up with that money in the future all at once. If the answer is that you don't have the cash to pay off the lender now and probably won't for years to come, and you would need the lender's permission to go through a short sale, you're probably right in thinking that paying extra toward principal would be throwing good money after bad. If that's the case, you might need the money for home repairs, for current living expenses or for savings for your children's education or your retirement. These are all financial decisions only you can make. If the real estate market in your area recovers to a point where you can sell your home and not have a balance owing to the bank, you'll have done very well. Keep in mind that if you have moral qualms about doing a short sale and asking the lender release from any balance you might still owe on the loan, you can sign a promissory note and agree to repay any deficiency to the bank on an installment basis after the sale of the home. ■ See GLINK/Page E3
Photos courtesy Oakwood Homes The Kendall’s expansive kitchen opens to the dining and great rooms.
for the Take advantage of a special holiday bundle from Oakwood Homes PAID ADVERTORIAL
A
new home may be the last thing on your mind while shopping for friends and family, but Oakwood Homes is looking out for you. To ensure homebuyers
get a gift this holiday, they are offering a Holiday Bundle for anyone that purchases a new Oakwood home at Thompson River Ranch before Dec. 31. With Centerra being a go-to spot for shopping in Northern Colorado, be sure to stop by this Loveland community when you’re done shopping – which is only a couple minutes from Centerra – and treat yourself to a tour of this dynamic community and model homes. Ninety-one families have contracted on homes in Thompson River Ranch this year, proving not all areas
The luxurious kitchen of the Fletcher floor plan.
are troubled in the housing market. It is the fastest growing community in Northern Colorado but Oakwood Homes wants you to end your year with a bang! Through December 31, when you contract on a new Carson Collection home in Thompson River Ranch, you will receive free granite tile countertops, hardwood floors and a finished basement as a part of your Holiday Bundle! The plans in the Carson Collection start as low as $226,400 and this free bundle adds that much more to these luxury homes at affordable prices. An included finished basement means you can get their best-selling Fletcher or Kendall plans for as little as $72/$78 per square foot respectively. The Fletcher includes three bedrooms plus a bonus room, two-and-a-half baths and two-car garage. For larger or growing families, there are choices for up to five bedrooms and four-and-a-half baths giving up to a total of
3,126 finished square feet. There may be snow on the ground, but that only adds to the mountain views this time of year. With all the snow, have some family fun making a snowman or enjoying other winter activities in the acres of open fields and space the community has to offer. You can stop by the sales office at 3831 Heatherwood Circle and pick up a map of the community to make your tour even easier. Tour the nine models and see if a new home could be your treat this holiday season. Dwayne Montoya and Mike Welty can answer your questions this weekend from 10 a.m.-6 p.m. and give more nformation about Oakwood’s Holiday Bundle through Dec. 31. From general questions to setting up an appointment, you can call them at 970-669-9801. You can view all the plans, including the special bundled Carson Collection plans, at www.OakwoodHomesCO.com for a preview of your next home!
Exterior of the Fletcher model in Thompson River Ranch.
Buying a home that needs work? Call the experts in FHA 203(k) renovation financing. An FHA 203(k) mortgage allows you to finance both your home purchase and renovation with a single loan. Call now to learn more. Vivian DeVoe, VP Mortgage Banker, NMLS#269876, 970-227-4702 Loans and rates subject to credit approval. Owner-occupied residences only. FHA conditions and restrictions apply.
www.HomeStateBank.com
970-203-6100 Check the license status of your mortgage loan originator at http://www.dora.state.co.us/real-estate/index.htm Think big
Bank small