If your home is upside down, this means that you owe more money on your loan than the home is worth. Negative Equity is another term. This is a quick guide to help people who are in this situation.

Assess The Value Of Your Home

Assessing whether or not your value will recover is the first step. Two components are required for estimating value.

1. Calculate the home's value

   This is an excellent starting point. Next, you can contact a local agent to get a free value estimate. This will allow you to fine-tune your value assessment.

2. Enter your city name to calculate the area's value

3. This will provide you with average rents and prices, as well as detailed analytics that access market health, pricing history, and foreclosure stats. You can also drill down to your neighborhood.

These two steps will allow you to determine if your home's worth is likely to rise in value over your loan amount within a reasonable amount of time. If the probability is high, you might consider staying, especially if your family has jobs or schools nearby.

Making Home Affordable (MHA)

If you feel that your home's value is not likely to rise, contact Making Home Affordable (MHA), a U.S. government program that helps homeowners who are financially strapped. To assess your options, you can visit MHA online or call them at 888-995 HOPE. This official government resource will help you avoid scams that target homeowners who are upside down.

Options For Homeowners

The following options are available when you work with MHA (or any government-approved housing counseling agency they refer to you too).

• A short sale is a way to avoid foreclosure:

  This happens when you are upside down and have to sell. To make a short sale, your lender must approve it. They will accept less than what they owe at closing. The short-sale guide describes how a short sale works.

• Loan modification to preserve your home and reduce costs:

  When your lender assesses your financial situation, they may offer to modify your loan. This means that your lender might reduce your loan balance, lower your interest rate, reduce payments, or all three. Although applying for a loan modification will be similar to applying for your original mortgage is not required. However, you'll be asked to provide documentation and explain why you cannot afford your monthly payments.

• Rent your house to offset costs and keep it:

  You can rent out your home to offset some of the home's cost. Get rent estimates for the area of your home and a new area to see if this is an option for you.