Even with the housing market beginning to improve, many homeowners are still facing the issue of owning more on their home than it is worth in today's market. Foreclosure is still something that a growing number of struggling homeowners are facing. Although some may have reached the point where there is no other option but to default of the loan, there are some alternatives to walking away from your mortgage that are worth considering before allowing the property to be foreclosed on.
The first alternative to consider, ideally before you have fallen too far behind would be refinancing. The key to being able to refinance is to not wait until you are in default. Higher credit standards will require high credit scores and a good payment history. With interest rates at historic lows, many people can get out from underwater before foreclosure by lowering their interest rate.
For those who have already fallen behind or simply are unable to refinance there is the modification loan option. Before you forfeit your property, it is worth taking the time to apply for a loan modification. If you qualify you can have your payments reduced by lowering rates or lengthening the term of the loan to give you a chance to get back on your feet.
If you are just unable to make the required payments and you must give up the home, a short sale may a good alternative to foreclosure. When the lender allows the sale of the property for less than is owed on the mortgage it is called a short sale. Since April of 2010 the Home Affordable Foreclosure Alternatives program allows up to $3,000.00 for homeowners that agree to a short sale as a foreclosure alternative and $1,500.00 available to servicers for every short sale that closes. When you consult a professional with a real estate license make sure that they have extensive real estate training in the area of short sales.
These are not all ideal alternatives, and they may still have an impact on your credit rating, but they will not necessarily impact it to the degree that a foreclosure does. Having to accept the loss of a home can be devastating and hard to face, but all of these alternatives are better than foreclosure; if not only to your credit rating then to the overall health of the housing market. It is important to remember that a significant number of the people that are upside down in their mortgages are that way due largely to the growing number of foreclosures on the market. Avoiding a foreclosure when at all possible will play a big role in restoring the value to the housing market.
Although the economy is beginning to see signs of recovery, there are a lot of people who are still trying to hold on. Unemployment remains high and many people are facing some devastating losses. As hard as it is to face losing a home, the sooner you take action the more options there are available to you.
Comments(1)