Finally, Some Useful Foreclosure Assistance!
Posted: Monday, October 04, 2010
by Ansel McGovern
Carmel-Indiana.us
Stuff happens. Losing one's employment, living through an sudden medical crisis: These are just a few good examples of things that can go wrong. And if they do fail it can be difficult to pay the mortgage. Because distressed homeowners are so caught up in the stressfulness of their circumstances they may not stop to realize that foreclosure is just one of several different outcomes that exist. If you're wondering what can be done, if anything, then be sure to read the following options. You might be surprised at the possibilities you didn't know existed.
Commence by getting a hold of your mortgage lender. They might possibly be inclined to allow you bring your mortgage current over time. WIth a repayment plan, the amount that is past-due gets added on to your regular payments until it is brought paid in full. Don't dwell on your credit whilst you are in the process of making payments according to the repayment plan as generally there will be no improvement for several months. As this challenging chapter in your life becomes more and more historic you will see that your credit will slowly improve.
Loan Modification
With a loan modification, important loan terms may be changed or modified. Hence the term "loan modification". Maybe you have a 15-year term, and the payment is just too high. You may be able to get a longer terms, such as a 20 or 30-year term. Or, if you already have a fixed rate that's just too high then you may be able to get a lower rate. If you went with a 15-year mortgage term, then you may now be regretting it since the payment is much higher compared to a 30-year. Ask you lender about having your term modified. But if your lender does not see that your loan terms are causing you harship then you may not qualify.
Forbearance
A forebearance temporarily eliminates your loan payments while you get your financial situation in order. But if you must get a forebearance, just be advised that you will have a higher mortgage payment once the grace period ends. This will last only until the original past-due amount has been repaid. If you got a loan that was insurred under the Federal Housing Adminstration then you may enjoy a periods of up to 12 months.
Deed-in-Lieu of Foreclosure
This option is far from ideal. Nevertheless, you will be freed of any obligation to repay the mortgage by simply relenquishing any owership interest. Assuming you qualify, you will simply turn over your deed to your lender. Plus you may be eligible for cash-back, which can greatly help with moving expenses. But understand that this option is not available to anyone who is fully capable of making their his or her payment.
Cash Sale
With the cash sale sale option, you sell the house for enough to pay off what you owe. You may be able to save your credit score if the sale can be made quickly enough. This is a good way to go if you will be in default in the very near future. In order to sell your home quickly, however, you may likely have to drop your price tag significantly below market value. A lot of prospective buyers, in particular real estate investors, will offer to pay your loan on the condition that you forfeit any remaining equity.
Short Sale
With this option, the borrower avoids foreclosure by paying the lender an agreed upon sum that is less that the full mortgage loan balance. The lender will put in writing that it will accept no less than a certain amount. You'll be spared the credit damage that would have otherwise occurred had you gone through the foreclosure process.
Refinance
If the house has enough equity then refinancing may be feasible. For home owners who lack equity refinancing may not be feasible, except if the loan to be refinanced is FHA insured. FHA Lenders will turn a blind eye to anything other than a borrower's mortgage payment history. Because of this, a borrower's credit could be in the tank and it wouldn't matter. Nor would having insufficient equity.
Knowing how to best proceed when you can't make your mortgage payment is crucial to minimizing the damage that will otherwise occur. The biggest mistake you can make when dealing with the possibility of foreclosure is to do nothing at all.
Ansel McGovern is a proficient mortgage and real estate publisher. Ansel made a living as a mortgage counselor for years prior to taking up writing. His current concentration is on such subjects as real estate advice and mortgage tips.
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