Did you get the Foreclosure Notice? or know its on its way?
If your looking at foreclosure, you need to know there are several options to foreclosure. Do not let the bank take your home through foreclosure. Foreclosure should be the last resort.
Situations vary from homeowner to homeowner, and there is no one solution. What option are available to you instead of foreclosure:
- Forebearance- Forebearance is an agreement worked out with the bank, where the homeowner agrees to pay the delinquent mortgage and charges over a period of time and continue to keep the mortgage current. This is a good option for someone who's financial crisis has been resolved like a job loss where the homeowner has found a new job. The bank will look at your ability to pay the current mortgage and the deliquency.
- Loan Modification- A loan modification is where the homeowner and the bank renegotiate the terms of the loan, potentially saving the homeowner hundreds of dollars a month. Potentially a suspension of payments, a lower interest rate, extended loan payback or a combination thereof. You will still have to show an ability to repay the new payment.
- Refinancing- Refinancing is for a homeowner that is not yet late on their payment and who have plenty of equity to work with. If you are in default it is most likely you will not get a bank to refinance you.
- Deed in Lieu of Foreclosure- A deed in Lieu of Foreclosure is where the bank and the homeowner agree to let the homeowner sign the deed over to the bank. The only time this is possible is when there is only one bank involved and no mortgage insurance company involved. A deed in lieu of foreclosure should have less impact on your credit, but there is the possibility that the bank can file for a deficiency judgment after the property is sold.
- Short Sale- If you know your going to loose your house anyways, a short sale is your best alternative. A short sale is where you negotiate with the bank a short payoff on your home. It is key to negotiate a forgiveness of the balance that was not collected. It allows you to walk away with out fear of a deficiency judgment following you around.
- Bankruptcy- If you have a lot of consumer debt, this could be an option. The courts will make you payback only a certain portion of what you owe on the debt, allowing you to have more money to pay your mortgage. This can be tricky, once you declare bankruptcy the courts are in charge of what happens. Also the bank can get a stay of relief and the house can be back in foreclosure in 30 days. You have to ask yourself what is going to change in the next six months that will allow me to keep my house and pay my bills.
The key is to stay calm and rational. Look and see if the solutions are viable or are they just putting a band aid on the problem. I watch people get involved in loan modifications that they can barely afford and they are making payment on a loan of which is worth 2X what the house is worth. Why would you want to pay back $350,000 on a house thats worth only $180,000? Remember, you have options, don't let the bank take your home.
For your confidential, complimentary consultation call Kevin Vitali at 978-360-0422. I will help you decide which alternative might be best for you