Do I Owe More Than My House Is Worth? How to Know and What Your Options Are

The first: what your house is worth today. Not what you paid, not what a website says, and not what the neighbor's house sold for two years ago. It's what a buyer would pay for your home today, as it is, compared with similar homes that sold recently nearby. That comes from a market analysis, not a guess.

The second: what it takes to pay off the loan. Not the balance on your monthly statement. It's the payoff: what your lender charges to close out the loan on a specific date, including interest up to that day. You can request it yourself by calling your lender. Then add anything else secured by the house: a home equity line, a loan for solar panels or a roof, unpaid homeowners association dues.

Write both numbers on one page, next to each other. That page will tell you more than any worry at midnight.

Pay attention here, because this is where most people get tripped up. Selling has costs. There are closing costs, title company charges, prorated property taxes, repairs negotiated after the inspection. If your house is worth about what you owe, you may still come up short once everything is paid.

So the real math is: what it's worth, minus what you owe, minus the costs of selling. If that answer is negative, you're in this conversation even if, on paper, the house is "worth more." The full cost list is in you will pay to move twice.

Here they are, from simplest to the one with the most steps. None of them fits everyone.

1. Wait, if you can. If you don't have to move right now and you can keep up with your payments, every payment lowers what you owe. Sometimes the best decision is not to sell yet. I explain when in when selling is not the right move yet.
2. Bring the difference to closing. If the gap is small and you have savings, some owners cover it at the closing table and move on. The title company gives you the exact figure.
3. Ask your lender about selling for less than you owe. This is called a short sale. The lender agrees to let the house sell for less and closes out the loan with that money. But the lender has to approve it, asks for paperwork, takes time, and can say no. There may also be a remaining balance the lender tries to collect later, and there can be tax or credit consequences. Your lender, an attorney and a CPA confirm all of that before you sign anything.
4. Lender options that aren't selling. If the real problem is that the payments are getting hard, your lender may have programs to change the loan or set up a repayment plan. Those questions go straight to your lender or to a HUD-approved housing counselor, who usually doesn't charge.

• Request your payoff good through a specific date.
• Get an analysis of what your home is worth today. You can start at veronicayeary.com/home-value.
• List any other debts secured by the house on the same page.
• Sit down with someone who will show you the full math, selling costs included, before you call anyone else.

With that page in hand, the conversation with your lender changes. You stop showing up with fear and start showing up with numbers.

It happens when a home was bought with a very small down payment and prices in that area dipped, when a second loan was taken against the house, when a refinance pulled cash out, or when the house needs major repairs that pull its value down. None of that means you did something wrong. It's math that changed, and math can be worked with.

Can I sell my house if I'm still paying it off?

Yes. Most homes that sell in Texas still have a loan on them. At closing, the title company pays the lender out of the sale proceeds. It only gets complicated when the money coming in isn't enough to cover what's owed.

How do I know if I'm underwater without talking to anyone?

With the two numbers: your payoff (call your lender) and a real market value. An automated online estimate gives you a rough idea, but it can be far from what your particular home would actually sell for.

Does my lender have to accept a short sale?

No. It's the lender's decision, case by case. No one can promise you it will be approved, and I won't either.

Will a short sale hurt my credit?

It can. How much and for how long depends on your situation. That's a question for your lender or a HUD-approved housing counselor, not your agent.

Should I just sell to a company that buys houses for cash?

If you already owe more than it's worth, a low offer doesn't close the gap. It makes it bigger. Before you sign with anyone, do the two-number math first.

Owing more than your house is worth feels frightening when it's an idea in your head. It becomes manageable when it's two numbers on a page. Get them, add in the costs of selling, and then decide: wait, cover the difference, or talk to your lender. No rush, and nothing signed that you don't understand.

Want to put the two numbers side by side together?

If you'd like to start on your own, request your home's value at veronicayeary.com/home-value or download the seller guide. If you'd rather go through it with me, call or text me at 469-441-8890, or email veronica@veronicayeary.com. No commitment, nothing to sign.

Veronica Yeary, Realtor® · CRS · ABR · SRS · CIPS · All City Real Estate DFW.

469-441-8890 · Call or text · veronica@veronicayeary.com · Email