Avoiding Foreclosure....You Do Have Options

Foreclosure is something that we would not wish upon anybody.  Due to unforseen circumstances in an individuals life they may inevitably be faced with the fact that foreclosure of their home is in their near future. However, for a lot of people, foreclosure can be avoided. Lets talk about the subject a bit.

Lets say you have had a recent tragedy in the family(i.e. Death, Layoff, Divorce, etc). Whatever the case it has greatly hindered your ability to make your mortgage payments on time, if at all.  This is a lose/lose situation for all involved. The mortgage company isn't getting their payments and your are at risk of losing your home within the next few months. Not to mention the stress this has created in your life and on your relationships.

If you have an abundance of equity in your home you may be able to sell it to an investor quickly. BUT SELLER BEWARE. Investors have no ones interest in mind except their own. Plus, investors typically do not pay more that 70% of the homes value. Unfortunately most people do not have 30% equity in their homes at the near forclosure stage. Especially if they have purchased it within the last 5 years. If this is an option for your then GREAT, your on your way to selling your home. If not, their is another option.

This second option is what we in the real estate industry call a "short sale".  A short sale takes place when a Real Estate agent works directly with the lender and the homeowner to get the lender to accept a dollar amount LESS than the amount owed as total payoff.  Yes, I did say LESS than the amount owed.

• Example: You purchased a home two years ago for $150,000.  Six months after purchasing this home the real estate market was hot, so you took out a $40,000 Home Equity line to make some improvements. Now you owe $190,000  and the real estate market has cooled down and has an overabundance of inventory. Making your homes current market value around $180,000.  You have been laid off from you job and are now unable to make the payments in a timely manner. Foreclosure is in your near future.  For a $180,000 home the estimated closing costs(title company fees, real estate brokerage fees, tax fees etc.) are around $15,000. Leaving you in the hole approx $25,000 from what you owe.

At this point is where many homeowners stop answering lender phone calls because they fear they have no options. They move out of the property and the property gets forclosed. But they do have options.  Lenders DO NOT want to foreclose on a home!! Why? It is very expensive for them.  Nine times out of 10 it is cheaper for them to take an amount less than the current note as full payment rather than to foreclose.

If you or someone you know is in a bad financial situation with there home please give us a call. We will set up a private consultation to discuss the options and what might be right for you. Not every real estate agent is trained in how to work with lenders on these situations. We have gone through extensive training and know how to work with lenders to get you on your way to a better financial situation.