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If you are facing the possibility of a foreclosure on your home, it can be an incredibly stressful time. No one wants a foreclosure on their credit rating and no one wants to lose their home. There are many options that are available and many times the foreclosure process can be avoided. It is very important to know your options so that you can make a decision that is right for your individual situation.
Loan Modification
Many times, if you are facing a temporary financial setback, or you still are able to make payments but finding it difficult, a bank will be willing to work out a loan modification with you. In this situation, the terms of the existing loan are renegotiated. This may mean a lower interest rate, or a change in the amount of money that is due every month. If you still have good credit and have not fallen too far behind in your payments, this may be the best option for you.
A bank will typically be willing to do a loan modification, especially if the other alternative is a foreclosure. They lose money in that situation and most banks are generally willing to work out a deal with you that will be suitable for both parties. This option is recommend although many do not qualify under current stipulations.
Short Sale
If you owe more than your home is currently worth, do not have equity in your home or if you purchased the home within the past few years, a short sale may be your best option. In this situation, you will end up losing the money you invested in your home, but your credit report may not necessarily take the blow that it would if you underwent a foreclosure.
For this to work, you need to first approach your bank and let them know that you need to do a short sale. They will get a BPO, or a Broker’s Price Opinion to confirm that you do indeed owe more than the home is worth. Then, you will need to submit financial documentation, a hardship letter explaining your financial situation and an offer to show that you have someone to buy the property. The bank will then negotiate a short sale. This means that they will settle the loan for less than it is actually worth. This will go on your credit report, but it is not a black mark like a foreclosure would be.
Buyer Assumed Mortgage
In many cases, a buyer may be willing to assume your mortgage and begin making payments on it. This may mean speculating on the buyer’s part under the hopes that the property values will later rise and they will not be out any money. This is not a common option, but it can work if you can find the right buyer. In many ways, it’s an attractive deal for a buyer and if your bank is willing to let them assume the mortgage, then you can bypass the need for a short sale or a foreclosure.
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Tags: Buyer, Buyer Assumed Mortgage, Foreclosure, Home, House, Loan Modification, Real Estate, San Marcos, Seller, Short Sale, Solana Beach
Posted In Blog, Sellers, Short Sales
This entry was posted on Thursday, January 14th, 2010 at 9:41 pm and is filed under Blog, Sellers, Short Sales. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.