If you are struggling to make mortgage payments, you have two options. First, we counsel clients in how to go back to their lender and renegotiate the terms of their loan. With the initiation of the Homeowner Affordability and Stability Plan, part of the recent stimulus bill, homeowners have the option of refinancing even if their loan to value ratio is above 80%, the current guideline for conforming loans. There are also options for those that have had their income reduced. The new plan allows for government and investment banks to work together to lower interest rates on loans and thus lower payments for those with either reduced income or reduced equity in their homes. The bill is somewhat complicated. Make sure you are talking to a mortgage broker or bank that is staying on top of these changes.
If you do not qualify for these new programs either because your income is now too low or you are too upside down on your home (you owe considerably more than what your home is worth), you may qualify for a short sale. This is when the bank is "shorted" what they are due according to the mortgage terms. It does reduce your credit score but looks better than walking away from the home and allowing it to go to foreclosure. According to RC Thielemann, of Capital Mortgage, a short sale will drop your credit score about 100 points, where a foreclosure will drop your score 300 points and make it very difficult for you to purchase again. The added benefit is that you have a place to live while you are selling your home. If you think this is an option for you or someone you know, please call us. We don't want to see anyone lose their home but if they must, this is a better way to do it.
TOP 5 REASONS NOT TO FORECLOSE!!
1. THE HOMEOWNER WILL ALWAYS HAVE TO DISCLOSE THAT THEY HAVE HAD A FORECLOSURE ON ANY MORTGAGE APPLICATION. FOREVER!!! NOT JUST 7-10 YEARS.THE MORTGAGE APPLICATION ASKS IF YOU HAVE "EVER" HAD A FORECLOSURE.
2. CREDIT SCORES WILL BE LOWERED BY 300 PLUS POINTS AFFECTING THE ABILITY TO GET A CAR, APARTMENT, CREDIT CARDS, EVEN CAR INSURANCE. SHORT SALES LOWER YOUR SCORE ON AVERAGE ABOUT 100 POINTS. YOU MAY BE ABLE TO BUY ANOTHER HOME A YEAR LATER.
3. A FORECLOSURE IS THE ONE CREDIT REPORT ITEM THAT IS ALMOST IMPOSSIBLE TO "REPAIR".
4. MILITARY AND GOVERNMENT SECURITY CLEARANCE COULD BE AT RISK WITH FORECLOSURE.
5. MANY EMPLOYERS RUN CREDIT CHECKS ON PROSPECTIVE EMPLOYEES AND FORECLOSURE IS ONE OF THE TOP ITEMS THAT WILL PUT A POTENTIAL NEW HIRE IN JEOPARDY.
AGAIN, IF YOU ARE STRUGGLING, YOU AREN'T ALONE. JUST CALL AN AGENT THAT IS EXPERIENCED AND CAN HELP YOU THROUGH THE PROCESS. WE'RE REO CERTIFIED (DISTRESSED PROPERTIES) AND HAVE NOT LOST ONE SHORT SALE YET TO FORECLOSURE! AND WE DON'T INTEND TO START NOW!
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