In this how to guide we will recap your options and steps you can take to saving your home from foreclosure.
Option 1 Bankruptcy
Bankruptcy should be avoided at all cost. New laws may not even allow you file bankruptcy and / or include your home in the process. Bankruptcy is the worst financial scar and almost impossible to recover from. Bankruptcy should only be considered if you have exhausted all options and have no way of paying for your home and other debts that have mounted during this process. If your thinking about bankrputcy please consult a real estate attorney about other options.
Option 2 Short Sale
A short sale is when you try to sell your home before going into foreclosure. This is a very possible solution if agreed upon by your lender. When lenders agree to do a short sale in real estate, it means the lender is accepting less than the total amount due. Not all lenders will accept short sales or discounted payoffs, especially if it would make more financial sense to foreclose; moreover, not all sellers nor all properties qualify for short sales. Also you have to consider how long it may take to sell the home, the equity you do or do not have in the home and how behind you are on your mortgage. A short sale for a homeowner that has no equity is not really going to have much leverage, a short sale is considered a deal by a buyer and if the equity in the home is not there then it simply will not be purchased. We are also in a housing market that has foreclosures for sale on every block and home prices dropping daily. Selling a home under any condition is going to be hard. All this while you are still responsible for this mortgage payment, taxes, insurance and more. Contact an attorney about a short sale alternative.
Option 3 Loan Modification
Loan modification is a good option for most homeowners. Homeowners that have come under some hardship but are still able to maintain an adjusted mortgage payment or term may qualify for a loan modification. You must be careful here and consult a loan modification attorney before contacting your lender. Every thing you say, how you say it and the legal aspect of foreclosure is very tricky. Get help before you try and work with your lender.
Loan modification is hard to achieve for homeowners that have experienced permanent job loss or long term income issues. The ability to still make the modified payments is the key to a loan modification. Homeowners that have had rates adjust, temporary job loss, illness, divorce and other short term hardships are good candidates for loan modification.
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