Most homeowners believe they have very limited choices when faced with not being able to afford their mortgage payments. Below are some options that you may want to consider.
SHORT SALE:
In a short sale, the bank or mortgage lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is done through a qualified REAL ESTATE AGENT with the bank’s loss mitigation or workout department. It is imperative that the bank agrees to extinguish the remaining balance and it is clearly indicated on the acceptance of the offer. What Is A Short Sale?
LOAN MODIFICATION:
Loan modifications allow the bank to make loan payments more affordable for borrowers. They may change interest rates, loan terms, loan balances, or other parts of the loan agreement. Loan modifications are not available to everyone. Please note it is illegal in the State of California for anyone to collect money up front to represent you in trying to get your loan modified. Check out www.DRE.CA.GOV for reputable companies and to see the latest in loan modification scams.
REFINANCING:
If your credit, equity, job history, and cash reserves are all strong, you may be able to refinance your loan through a mortgage broker or direct lender. This may drop you monthly payments to a more affordable amount.
DEED IN LIEU OF FORECLOSURE:
Homeowners that are behind in payments and have negative equity, may consider doing a deed in lieu of foreclosure. Lenders will frequently accept this because it is a less expensive and time consuming process for them than a full foreclosure action. The upside is that a deed-in-lieu is a faster solution than a short sale. On the downside, if the lender eventually sells the home for a price that doesn’t pay off the original mortgage amount, they can get a deficiency judgment and try to collect it from you.
GOVERNMENT LOAN PROGRAMS:
The federal government, through FHA, offers down payment assistant programs and other programs that are meant to keep homeowners in their home. Check with your local HUD programs to explore these options. HUD website
BANKRUPTCY:
For certain homeowners that have negative equity and a large amount of unsecured debt, including credit cards, bankruptcy may be an option. It is best to contact a bankruptcy attorney for additional information.
LISTING YOUR HOME FOR SALE:
This is the most obvious solution. But if you owe more than the home is worth, you would have to pay “out of pocket” to make up the difference.
FORECLOSURE:
Foreclosure is the termination of all rights of the homeowner covered by a mortgage. It is a process in which the home becomes the absolute property of the lending institution. This is basically not an option but a result of the homeowner not making payments to the bank. After a certain amount of time, a notice of default will be filed, followed by foreclosure proceedings. The amount of time the homeowner can stay in the home varies on where you live and the aggressiveness of the lending institution(s).
These are some of the options that a distressed homeowner may consider. It is not intended to influence a homeowner’s choice or be considered a complete list of what can be done. It is best to contact local professionals that will look out for you best interests. Lawyers, accountants, and experienced realtors can help you make an informed decision.
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Posted In Featured, Real Estate News
This entry was posted on Wednesday, February 3rd, 2010 at 12:45 pm and is filed under Featured, Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.