Increasing numbers of homeowners are facing a tough choice in this difficult economic times. Foreclosures are becoming more and more common even among families that could not even think about it just recently.
There are many home owners that don't know there are other options other than foreclosure. Some are even too busy or embarrassed to investigate their options and look for an alternative.
I will try to explain some of the things that a homeowner can do to avoid a foreclosure -- such as a short sale or a loan modification. Both short sale and loan modification would help in avoiding a foreclosure but each option has a different ramification and outcome.
The short sale is for those that absolutely need to move and wipe out their debt altogether. A loan modification is for those that would really like to remain in their homes but cannot do so without lowering their payment either temporarily or permanently.
It is important to remember that banks are not in the business of owning Real Estate - they are in business of lending money - and would much rather assist a homeowner than to take ownership of their home.
Short Sale Option.
A short sale is a legal lender approved solution designed to assist those home owners who are financially strapped to get out from under their mortgage debt. A short sale is negotiated through the mortgage holder of an owner’s home whereby the mortgage holder agrees to take less than what home owner owes on the property. The home owner benefits in this situation because they get out of their financial problems without going to foreclosure which can seriously damage their credit. Most lenders will work with a short sale option to avoid a costly foreclosure.
You might ask why? There are a number of reasons why banks would want to negotiate a short sale. The easy answer is that in most cases a bank will lose significantly less if they agree to a short sale. The banks will save on attorney fees and will clean their books - at the same time.
Loan Modification Option.
What you need to understand is that just because you missed a few mortgage payments does not mean that a bank is not going to want to work with you! There are times in people lives where they can come under financial stress.
Banks understand that sometimes a person’s problems are not permanent and can turn around. You have all the incentive to try to avoid the foreclosure process at all costs and the bank might be interested in doing so as well.
With a foreclosure on your record you will not be able to buy a property with conventional loan financing for five years. So if you or someone you know is potentially facing a foreclosure because of falling behind in mortgage payments don't just sit back and let it happen. Reach out to your lender and explain your situation right away and ask for their help.
The 1st thing a lender or bank will want to know is exactly where you stand financially at the moment and what you can afford. Let the mortgage company or bank know your exact situation. Speak to them about your desire to remain in the home and how you can work out a payment plan that will be mutually beneficial.
The bank is going to want to know what has caused you to become financially strapped. You can plan on being asked to put this in writing. This is known as a "hardship letter". In the letter you will be asked to explain the circumstances behind your missed payments and show an understanding of why you believe you will be able to continue to make payments under the modified terms.
The bank has the option to try to keep you in the home in a number of ways including an extension of the length of the mortgage, the interest rate or principal reduction. It could also be a combination of all three.
Conclusion.
I have been able to help many homeowners to negotiate a short sale and modification working with many lenders such as Countrywide, GMAC, National City, Washington Mutual and others. If you decide to go short sale or load modification route, it is important to find a Realtor who has experience doing short sale and loan mods. This process can be lengthy and require significant investment in time and resources. For many home owners it is well worth it!
Please call me at 704-293-3600 or e-mail broker@carolinasmetro.com for help.
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2 comments:
Loan modifications or home refinancing has been one of the means people and property owners do these days to avoid foreclosure.florida real estate license course
Thanks for sharing such helpful information and I must say Loan modification or home refinancing has been one of the means people and property owners do these days to avoid foreclosure.
Chris Angel Real Estate
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