How To Deal With A Foreclosure Situation
It is no secret that foreclosures in America are on the rise and it appears no end is in site. In fact, there are more and more articles written every day about the increasing number of foreclosures across the country. Unfortunately, it is difficult to find much information on what a homeowner should do if facing the prospects of losing their home. If you are a homeowner that is currently behind on your mortgage payments or if your life situation is heading in the direction where the writing is on the wall, then you should read this information carefully.
When faced with the question, the majority of homeowners who are facing the prospects of foreclosure want to try to find a way to keep their home if at all possible over selling their house. For those individuals that want to keep their home, you should evaluate the following possibilities. Regardless of which option you may choose, the key is to act quickly. Do not hope that things will work themselves out. The sooner you act, the better chance that a lender will agree to cooperate with you.
If your financial situation and credit are good, then you may be able to refinance or get a second mortgage on the home and roll in the back payments into the new loan. In many states, there must be equity in the home to refinance the property. If able, this may be your best option if you can afford to make the payments. If not, you may soon be back in the same situation with less equity in your home. In some cases, it may be more difficult to sell the home down the line if you do not have enough equity to cover Realtor costs.
If refinancing or getting a second mortgage is not an option, your lender may allow you to utilize a forbearance. By allowing a homeowner to set aside back payments and bringing the payment status current, a forbearance can provide a clean slate. In order to grant a forbearance, a lender will need to feel comfortable that the setback was short term. In most cases, the lender will allow a forbearance, but require a repayment program where the homeowner will continue to make the regular payments but will also be required to make additional payments to catch up the back payments. This is a great solution for those individuals that truly believe the setback was a one-time situation, are fully back on their feet, and can afford to make the extra payment on top of the regular mortgage payment.
If the homeowner cannot make up the back payments over a short period of time, then the lender may allow for a loan modification, where the back payments will be rolled into the entire loan balance and the lender will recalculate the payments to allow for the change in the loan balance. Under a loan modification, new payment amounts may only increase very slightly over the current loan payments. It is ultimately up to the lender whether or not a loan modification will be allowed, but as a troubled homeowner, this may be a viable solution.
Unfortunately, there are many homeowners that know that there is no way that one of the above methods will solve their situation. Whether it is a job loss, job transfer, divorce, or death in the family, there are numerous situations that can just not be overcome. If there is no hope at making the full mortgage payment in the future, then it is better to begin to evaluate your options of finding debt relief quickly and not wait until it may be too late.
The first option that the majority of homeowners should evaluate is to sell their home through a Realtor. Selling through a Realtor is the traditional means to selling a home in America. Depending on market dynamics, condition of the home, amount of equity, and the asking price, a homeowner may be able to receive an offer quickly and sell their home. Every state has a different timetable for the foreclosure process. States such as California have a process that lasts over 100 days once the Notice of Default is filed before the property is sold at the courthouse steps. Other states such as Texas have roughly 30 days after the Notice of Default before the property is sold. If time is not on your side, then utilizing a Realtor may not be an option. Furthermore, if there is no equity in the home, a homeowner will have to come out of pocket at closing to pay the 6% Realtor commission. The majority of homeowners facing foreclosure do not have the cash reserves to pay a Realtor at closing. A homeowner may attempt to market the property themselves to avoid the Realtor commission, but statistics prove that selling a home by owner at full price takes longer than utilizing a Realtor. Once again, if time is not on your side then selling a home by owner may not be a viable option.
Utilizing a real estate investor to sell a home quickly is becoming a more viable option in today’s market place, providing solutions to homeowners that were not previously available in the past. There are specific real estate investors that specialize in solving real estate problems such as foreclosure. If all the above options are not viable, then investors can fill in the gap so that homeowners have an option besides losing their house to the bank. Investors that specialize in foreclosures have a variety of options to suit the homeowner’s specific needs. Typically, the investor will provide immediate debt relief to the homeowner, which stops the foreclosure process. In return, the investor will buy the property under favorable terms that allow for a profit at some point in the future. It is a win-win for both sides. The investor puts up the capital and provides debt relief. The homeowner avoids foreclosure and saves their credit. Many of these investors can even help when there is little or no equity.
In conclusion, there are many steps that a homeowner can take to avoid foreclosure. If you have solved the problem and are now able to make payments on a timely basis, then working with the lender is your best option. If the situation appears that the home cannot be saved, then selling the property through a Realtor or by owner should be explored immediately. Acting quickly is important because time is not on your side during the foreclosure process. If all other options appear to be exhausted or if you are almost out of time, then utilizing a reputable real estate investor is a viable option to provide immediate debt relief and avoid foreclosure. As with any profession, when evaluating a Realtor or real estate investor, look to well-known companies that have a national scope and a solid reputation. Re/Max and Century 21 are two national brokers that have local Realtor offices in most major markets in America. WeBuyTheUSA is a nationwide network of real estate investors that have local affiliates, which handle foreclosure situations across the country. For more information on stopping foreclosure and your options, please contact Chris Cates at info@webuytheusa.com.
