I Was Underwater on My Mortgage When I Moved — Here’s What I Wish I Knew First
Written by
Laura Beck
Edited by
Rebekah Evans
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When Jess C. landed a great new gig at a Denver startup, she thought her biggest worry would be adjusting to the altitude. Instead, the 32-year-old software engineer found herself drowning in an underwater mortgage back in Austin.
“I felt like I was in financial quicksand,” she said. “The more I struggled, the deeper I sank.”
Here’s how Jess navigated this real estate nightmare and what she wishes she’d known from the get-go.
Also see five myths about debt you shouldn’t believe.
What Is an Underwater Mortgage?
Simply put, an underwater mortgage is when you owe more on your home than it’s worth. In Jess’s case, she bought her Austin condo for $300,000 in 2019. By 2023, thanks to a post-pandemic market dip in condos in her area, it was worth around $270,000. Unfortuately, she still owed $285,000 on the mortgage.
“I didn’t even know this was possible,” she said. “I thought property values only went up. You live, you learn.”
Short Sale Saga
Jess first tried a short sale, where the bank agrees to let you sell for less than you owe.
“What a headache,” she said. “Three months of paperwork hell, only for the bank to say ‘nah’ at the last minute.”
Coughing Up Cash
Unfortunately, Jess had no choice but to bring money to closing.
“I wrote a check for $20,000 just to sell my own home. It honestly sucked,” she said.
Credit Score Carnage
Even worse? Her credit score took a hit. “I went from the high 700s to the 600s. That was a tough blow because you need good credit for pretty much everything,” she said.
What She Would Do Differently
Talk To a Professional, Stat
If Jess had gotten professional help, she might have saved some money on the entire endeavor.
“I wasted months Googling stuff I didn’t understand,” Jess said. “I should’ve talked to a real estate attorney right away.”
The Tax Man Cometh
Jess lucked out on taxes, but just barely. “If I’d sold a year later, I would’ve owed taxes on that $20,000 the bank forgave. I dodged a bullet,” she said.
Renting: The Road Not Taken
“In retrospect, I should’ve just rented out my place and become a landlord,” she said. “But the thought of unclogging a toilet from a thousand miles away freaked me out.”
The other lesson Jess learned is that she wished she’d just stayed a renter. “Honestly, home ownership is held up as the end all, be all, but the fact is, renting can save you a lot of money and heartache,” she said.
Squeeze That Job Offer
Jess’s biggest regret? Not negotiating better relocation benefits. “I was so excited about the job, I didn’t even think to ask for help with my mortgage situation,” she said.
Many companies help with relocating fees for high-profile hires — but sometimes you have to ask and negotiate it into your deal.
Silver Linings Playbook
Despite the financial bruising, Jess loves living in Denver — especially as a renter!
“If my toilet clogs, that’s not my problem!” she said.
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