What is a Loan Modification:
A loan modification is where the bank modifies your mortgage payment to a lower payment to try to help you continue to stay in the home. Most loan modifications are temporary but there are some that are offered for the life of your loan. If you are in need of a loan modification a good place to start is to speak with a qualified HUD counselor to have them help determine what you may be eligible for. Please note to get a loan modification in most circumstances, you have to be employed.
What exactly is a short sale?
A short sale is when a bank is willing to let you sell the property for than the amount you owe on the mortgage in exchange for the property not going to foreclosure. The pay off on the mortgage is "short" hence the name "short sale”. This means that market value on your home is less than what you owe in today's market, causing a negative equity position, or “upside down”. Banks are willing to do this because a short sale saves them more money than the cost and of foreclosure.
What should I do if I receive a letter saying my home is going to be sent to foreclose?
Do not ignore letters or phone calls from your bank as this could cause more of a problem! Ignoring is the worst reaction you can have! If you are having problems making your payments, take action immediately, reach out to a trained and experienced professional to help you in your situation. Do not wait or hesitate!! The quicker you can be proactive on this, the better and potential of having more favorable options. Some options that can help you avoid foreclosure such as a short sale or loan modification are based on certain timelines and response times. Waiting or ignoring the situation at hand could push you in a direction where your options will be reduced, and may limit your control of the situation and put the control in the banks hands. Banks now offer various CO-OP short sale and loan modification programs, but will not extend help to you if you simple ignore the issue at hand and do not respond.
Part three to follow soon, stay tuned!!