Worried About Foreclosure? There Are Solutions Available To You
On average, about one out of every six homeowners are behind on their mortgage payments and are nearing the point where they will receive a notice of foreclosure on their home, or they already have received a notice. If this applies to you, no one has to tell you how difficult and stressful your life becomes. It’s an unfortunate situation that is frightening beyond description. But foreclosures can be avoided, and your credit along with your peace of mind can be restored.
There are a lot of options homeowners can take if they fear there may be a foreclosure on their home. The first thing anyone facing foreclosure should do is contact Angela Prince at Prince & Associates Realty. To give you an idea of some of the options available, here is a brief list of options for homeowners. But remember each option has its own pros and cons, so that’s why you need to contact Angela Prince to get an in-depth explanation. Some of the options are:
- Reinstatement: This is the simplest solution in terms of a “fast fix,” but it’s usually the most financially difficult option for the homeowner. The homeowner determines the total past due amount on the loan and pays it. No paperwork is required, and it can reinstate the mortgage to current status up to the day before the foreclosure auction.
- Forbearance or repayment plans: A forbearance involves the homeowner negotiating with the lender to allow the homeowner to pay past due payments over a period of time. It’s important to remember though, that the current payments must be paid as well.
- Mortgage modification: A modification involves the reduction of either the interest rate on the loan, the principal balance, the length of the loan, the loan terms or a combination of all of these.
- Renting the home: If a homeowner facing foreclosure has a mortgage payment that is low enough that it fits in what the local rental market will allow, the homeowner can rent the home and use the rental income to pay the mortgage payments.
- Deed in lieu of foreclosure: This is also referred to as a “friendly foreclosure” because if the lender agrees to it, the homeowner is allowed to return legal ownership of the property to the lender as opposed to going through the process of foreclosure.
- Bankruptcy: Sometimes this is referred to as a “foreclosure solution,” but bankruptcy is much more complicated than some people realize. Bankruptcy will only delay-but not stop the foreclosure process. Homeowners need to realize bankruptcy costs a lot in terms of out of pocket legal fees. It’s also extremely damaging to credit scores as well.
- Refinance: For this to happen, the homeowner must have sufficient equity in their home and have good credit. While this sounds like an easy solution, the drawback is that in today’s market this option will likely raise the mortgage payments which may not be suitable if a homeowner is having trouble paying the mortgage to begin with.
- Service members Civil Relief Act: This is something that is available to those currently serving in the U.S. military. If the homeowner’s inability to keep up with the mortgage payments due to military deployment, and if they can show that their debt was entered into prior to deployment, they may qualify for this assistance program. There are attorney’s who are familiar with this process and can help the service members if they qualify.
- Sell the property: If the home has sufficient equity, the homeowner can list the home with a qualified agent in their area. This can allow the homeowner to get money at closing due to the equity in their property, but this is the exception to the rule. In many cases homeowners do not have enough equity to cover past due payments and interest and still be able to get money at closing.
- Short sale: This is a solution that many homeowners choose to take. When a homeowner owes more on their property than what an appraisal says its worth, they can hire a qualified Real Estate professional to negotiate a sale with the lender in which the lender will agree to accept a lower amount than what is currently owed. The home is then listed for sale on the market as a short sale. This is a complicated process, and can take some time to get the home sold, but Real Estate professionals like Angela Prince understand the short sale process and can handle the process from beginning to end.