These may be some helpful tips for home owners facing foreclosure. For professional advice, seek a licensed real estate broker/agent such as Majestic Properties/Keller Williams Luxury Homes. www.mymajesticproperties.com or btipton@kw.com
1. Reinstatement...This is bringing your loan payments up to date with additional late fees and legal fees that the lender has issued. This can be done up to the auction date. It is not recommended to wait until the last second to do this option. You may contact the lender for the reinstatement letter and pay this off in 1 payment.
2. Re-payment or forbearance plan.....This option is chosen when the initial issue causing missed payments was temporary. A lender may set up plan to make up the missed payments over a specific period of time or add the missed payments to the back end of the loan The home owner is also responsible for late fees or any legal fees. The lender will usually require income verification to ensure there will be adequate funds to pay this amount back.
3. Rent the property....This is a possibility if the mortgage payments are low enough that rent may cover the mortgage and tax payments owed. This option becomes very hard to do when the home was purchased during the peak of the market.
4. Refinance....This is another solution which is possible if the issue that caused the property to be distressed was a short term issue. This will require the homeowner to have a relatively good credit score and in many cases a higher payment if interest rates haven't moved much since the original loan.
5. Loan Modification... This is one of the best options for home owners to stay in their homes although some reports state that less than 10% of loan mods actually get approved. Unfortunately, there is a very large lag time in response from the lenders to be able to effectively help most people. At this point in time very few are being completed. A loan mod. may reduce homeowners interest rate and even sometimes a small percentage of the remaining principal. Proof of income and expenses will be required for this process.
6. Deed in Lieu of foreclosure....This is one of the last resorts to avoid a foreclosure. A home owner signs the deed over to the bank or an investor thus preventing the bank a lengthy and expensive foreclosure process. The owner gives up all rights to the property including any equity that they may have.
7. Bankruptcy....Helps a home owner to reorganize debt and possibly keep their property. The bankruptcy will not guarantee the owner will continue to be able to keep their property. If after proceedings have begun, and the home owner still isn't able to make payments, the lender may still foreclose on the property. A bankruptcy will be on a person's permanent credit record and also be a question that needs to be answered on future job and credit applications. It also makes the possibility of completing a short sale very difficult.
8. Selling the property..... This is an obvious solution to foreclosure. Sell the property and pay off the balance of the loan either by the equity in the property or by bringing extra money to the closing table to meet all of the borrowers' obligations.
9. Short Sale..... This solution to stop foreclosure has become one of the most common ways to stop the foreclosure process. It has a minimal effect on a home owner's negative credit compared to a foreclosure. A short sale is when a lender negotiates a sale in which they accept less than the amount owed on a property by the borrower combined with the costs of the sale of the property. It is important to contact a Realtor that has been properly trained in dealing with short sales. The CDPE (Certified Distressed Property Expert) is a great resource to find a local Realtor. Banks are becoming more motivated and efficient in dealing with short sales. They have found it is much more financially beneficial to work with a short sale instead of letting the property go to foreclosure. If you have questions, need more information, or help with a decision whether to short sale a property, you may visit our website at www.mymajesticproperties.com or call us at 661-706-9401
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