The Most Common Foreclosure Choices
Following are the most common selections for people facing foreclosure. Depending on your situation, all of these options might, or may not, be available to you. Everyone's individual situation is diverse.
- Reinstate the Loan.
- Mortgage refinancing
- Loan Modification
- Sale of the Property
- Bankruptcy Filing
- Deed in Lieu of Foreclosures
1. Reinstate the Loan. The most obvious option is always to pay the loan current. If foreclosure proceedings have recently been filed, then the amount needed to get loan current will not just include back payments, but also late charges as well as possible attorney fees. This is the quickest as well as the most efficient way of closing a foreclosure action. Negotiate with the lender when you can do this. Sometimes they will take a smaller amount, 90%, 80%, even as low as 75%. Call them and say something such as, I've borrowed X amount of cash from my relatives, will you take that and forgive the remainder? Don't tell them it your money. Make it is always someone else's money. They are going to be less sensitive to you when you have lots of money and haven't been making payments. Get the discount in writing before you decide to send the money, an email or fax will do.
2. Forbearance The lender stops or postpones lawful action. Usually granted when you make satisfactory arrangements to bring the overdue mortgage payments current.
3. Mortgage refinancing Mortgage refinancing seeks to avoid foreclosure by visiting a new lender and obtaining a new loan. But in most cases, once foreclosure has started, you have been through a few months of late payments or simply no payments. These late payments have a devastating influence on your credit rating. In addition, the new mortgage company will easily learn about the current foreclosure action. This most often leads to denial with the refinance loan application. If you are approved it is possible to bet it will be with a VERY high interest rate with more than normal closing costs etc.
This option is normally just for those with excellent credit histories and who've only suffered a temporary problem. Remember that time is of the essence, so don't waste a lots of valuable time on this alternative. You could lose your residence while waiting on loan acceptance.
4. Loan Modification A loan modification seeks to avoid foreclosure by negotiating with the financial institution to modify the terms with the loan. Loan modifications may include adjusting he interest rate, extending the loan period or even adding the delinquent portion and fees back onto the main principal of the loan to be repaid over time.
5. Sale of the Property If you have been unable to work or do business with your lender or find another suitable solution in a timely manner, it is time you should consider selling.
Selling it through the traditional method, of listing it with a realtor on the MLS listing is actually one solution. But this method can take from four to six months. Make sure you get a genuine realtor. One who will work to offer the house and list it with a price it will sell for. Some realtor's over exaggerate the actual house's value and the selling price to obtain the listing and then the house doesn't sell and you are foreclosed on, losing everything. Do a short contract. One month at a time. Tell the realtor you will renew it on a monthly basis if they are good and are working hard to sell the home. If they are not willing to offer you a monthly contract or a contract that will allow you to cancel any time, then find another realtor. Time is of the essence and if the realtor is not willing to become a help in your situation, find a realtor who will be.
Another avenue to consider is selling your house to an investor who provides "a quick closing". Remember time is of the essence. Typically, this will be for under fair market value, but can be a benefit to you because this is a quick "as is" sale without real estate commissions. "As is" means you wouldn't normally have to spend any cash doing repairs, or spending time putting your house in perfect condition. By selling your house "as is" for an investor, you get a quick sale, enabling you to instantly stop foreclosure as well as salvage your credit. In the Kansas City metro area BLu Horizons Real Estate Solutions provides a quick closing, as is sale. We can close in seven days or less, if we have to.
6. Bankruptcy Filing Some homeowners act on their own lawyer's advice and file bankruptcy convinced that all their problems are right now solved. Bankruptcy does put a hold on everything. But all it buys you is time. The end result is, almost always the property still goes to auction and you now possess a bankruptcy, in addition to the foreclosure on your own credit report.
7. Deed in Lieu of Foreclosures This is when you can voluntary deed title in your property to the lender. You are basically giving your house back to the bank. The ordinary effect of the taking of a Deed in Lieu, is to extinguish the lender's deed of trust plus it vests the lender with title at the mercy of all other existing liens and also encumbrances. In effect, the lender becomes the brand new owner. The lender is not needed to accept the Deed in Lieu and may show their refusal by submitting a Notice of Non Acceptance with the County Recorder.
8. Nothing You may find this odd that nothing is listed as an option; however one of the most frequent options taken by homeowners will be Nothing. Don't fall into the trap of convinced that everything will magically work itself out, because it will not.
We trust that the overview of foreclosure options will allow you to start down the path of informed decision making to safeguard yourself, your family, your home and your banking account.
Although the most common options are covered on this report, there may be other options open to you, depending on your particular circumstance.
This is not legal advice or assistance! The application of law varies from state to state and an individual's specific circumstances can vary. Consult a lawyer if you need and you want professional advice.
This information was provided by BLu Horizons Real Estate Solutions at blu-res.com