Foreclosure Tips You Can Benefit From
Life won't at all times go our way
Life won't at all times go our way. If you have at any time found your self in the midst of a serious disrpution--career change, health problems, etc.-- then you know how difficult it can be to even function, let alone pay important bills such as your car or house payment. 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. Consider the following scenarios as they apply to your situation. You may find that there is a way to avoid foreclosure after all.
Mortgage Loan Repayment Plan
The company that services your loan might be inclined to extend a repayment plan to you. WIth a repayment plan, the amount that is past-due gets added on to your regular payments until it is brought paid in full. Only after you have successfully made it through the repayment agreement will your credit score have a probability of getting better. After some time, the short-lived period of difficulty you went through will weigh less and less on your credit score.
Loan Modification
A loan modification allows for beneficial changes in the terms of your loan. For example, maybe the payment that comes with your adjustable-rate mortgage is just way too high. You may be able to get a fixed rate so long as your lender thinks there's a benefit. Or, if your fixed rate is just too high then you may be able to get a lower rate. You may be able to get your loan modified so that your rate is lower. A loan modification can also be a way to append any past-due amount onto the the total outstanding balance. Your will nearly always have to show to your lender that your loan terms are creating a hardship.
Forbearance
With a forbearance you can go several months without a payment. But make no mistake: a forebearance isn't a free ride. Your payment will go up after the grace period ends, until you have repaid the arrearage. FHA offers a special forbearance whereby borrowers are allowed to go up to 12 months without making a payment.
Deed-in-Lieu of Foreclosure
If all you really want is to avoid a foreclosure on your credit then this may be something to consider. the only glitch: You lose the house. If you qualify, you will give the deed to your lender. Other than avoiding a foreclosure, the only other good thing about this option is the possibility for cash-out for moving expenses. If you are in fact capable of making your payment, but simply want to be done with it, then you should understand that you most likely will not qualify for this option.
Cash Sale
With a cash sale, a 3rd party will buy your home, leaving you enough time to pay the outstanding balance. The danger of credit damage with this option is low assuming that the purchase can be completed soon. This is a very good alternative for anybody who isn't presently past-due but foresees falling behind in the near future. No one wishes to sell below market price, but sorry to say, you may have to do pecisely this in order to sell in a hurry. Quite a few buyers, notably real estate investors, will offer to repay your loan on the condition that you forfeit any leftover equity.
Short Sale
Utilizing the short sale option means that your lender will get paid less than what is owed but will not start foreclosure proceedings. A rock bottom price, below which the house cannot be sold, will be specified in the short sale agreement. Your credit rating won't be hurt as much as it would had you gotten foreclosed upon.
Refinance
Refinancing could be a good option so long as the property has built up enough equity. In the event that the necessary equity is just not there then, unfortunately, refinancing is probably not an option for you, unelss you have an FHA-insurred loan. With FHA's Streamline Refinance program mortgage payment history is really what matters. Therefore, factors such as appraised value, income, assets, etc are not counted.
In closing, there are many alternatives to foreclosure that can be taken advantge of when you are informed. Not taking any action at all is far worse than doing the wrong thing.
by: ansel
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