A mortgage is a long term investment, one that soaks up the majority of each household’s budget. While paying extra on your mortgage principal can help you get out of mortgage debt and own your home free and clear much faster, it isn’t for everyone. If your home is currently worth less than you owe on the mortgage loan, paying down your mortgage may not be the best way to resolve your mortgage troubles.
Whether or not paying down a mortgage is beneficial boils down to one issue: your cash flow. If you have the money to pay off a deficiency balance from the sale of the home, you would be able to resolve your mortgage debts much faster than spending the next several years trying to pay off a home that is losing value. The idea would be to get out of the home quickly before it loses any more value, leaving you further upside down on your note.
If you don’t have the money to pay a deficiency balance from the sale of the home, or are planning to stay in the home for many years to come, you may be able to ride out the decreasing home value while working to pay down the principal on the mortgage. Another option would be to consider a short sale and waiver of deficiency balance, in which the lender agrees to allow the home to be sold for less than what it is worth and release you from paying the deficient amount. However, keep in mind that lenders may not be willing to pursue this option right away and you may have to prove financial hardship to gain approval from the lender.