Underwater on mortgage? Figure out when, how you might break even

March 16, 2012|Jamie Smith Hopkins

If you owe $100,000 more on your mortgage than your home is worth, do you have any idea when you might reach the break-even point?

HSH.com, a mortgage-information company, has a new calculator designed to help answer the question -- variations of which are bedeviling millions of borrowers across the country. (In the Baltimore area alone, 125,000 homes are "underwater," real estate data firm CoreLogic estimates.)

HSH's "KnowEquity When" calculator, launched this week, spits out an at-the-waterline date after you enter in your mortgage terms (how much, when, what interest rate), what you think your property is worth now and how much (if at all) you expect values will rise in the future.

What about a $300,000 mortgage with a 6 percent interest rate taken out in 2007 for a home now worth $200,000, say? If you assume no change in values, you won't get to even-steven for 11 more years, HSH says.

What if you pay $200 extra a month toward the principal? That would knock three years off.

For those who know when they need to be no longer underwater and just need to figure out how to make it happen, HSH has a second calculator, KnowEquity How. How, for instance, could that same poor guy above build up 6 percent equity in five years so he'll have enough to break even after sales costs?

HSH offers the following possibilities:

$1,220 per month prepayment and no home-value appreciation.

$1,150 per month prepayment and 0.5 percent annual appreciation.

$1,080 per month prepayment and 1 percent annual appreciation.

$930 per month prepayment and 2 percent annual appreciation.

... all the way to $450 per month prepayment and 5 percent annual appreciation.

How much time are you facing down if you're underwater?

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