Alternatives For Homes in Foreclosure

Real Estate Agent with Keller Williams Realty Professionals OREA# 201211562



Alternatives for Homes in Foreclosure


You may be facing foreclosure…so what are your options? Try to look at the situation from a financial standpoint rather than an emotional one. This way you can more successfully analyze which option might best homes in foreclosuresuit your needs and help resolve your financial difficulty. One important thing to remember: Time is of the essence. Think through your situation and make a decision. Then, after speaking to the appropriate specialists (like legal and tax) take action right away so you have enough time to complete your chosen solution.


Alternatives for Homes in Foreclosure


1. Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. This can have a negative impact for many years. Loan applications generally ask if the applicant has ever been foreclosed upon. Credit reports also disclose this damaging information. Not the best option.


2. Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New debt may be at different interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.


3. Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.


4. Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. The are local and Federal programs available for qualifying homeowners to help with modifications. You may need to provide current information and show you have the ability to comply with the new terms.


5. Forbearance – Lender may be able to arrange a repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments. Information will be required from the lender to show that you are able to meet the new payment plan requirements.


6. Partial Claim – A loan from the lender for a 2nd loan to include back payments, costs and fees.


7. Deed in Lieu of Foreclosure – Give the property back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current. Most loan applications ask if this has ever happened.


8. Bankruptcy – This option can liquidate debt and/or allow more time. Its advised you speak with a qualified bankruptcy attorney to review your individual situation.

--Chapter 7 (Liquidation) To completely settle personal debt.

 --Chapter 13 (Wage Earner Plan) Payments are made toward a plan to pay off debts in 3-5 years.

--Chapter 11 (Business Reorganization) A business debt solution.


9. Sale – If the property has equity (money left over after all loans and monetary encumbrances are paid) the homeowner can sell the home without lender approval using a conventional home sale. In this case, the homeowner will receive cash from the sale. On the other hand, a Short Sale, also known as a pre-foreclosure sale, can be negotiated with your lender if what's owed is MORE than the home is worth.


Thank you for reading about Alternatives For Homes in Foreclosure.


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