Posts Tagged ‘short sale’
There are several steps available to help you avoid a foreclosure. They all start with one thing: action. If you have already received an NOD (Notice of Default) or are behind on your loan payments, this article with give you some tips on avoiding foreclosure on your home. To avoid foreclosure, you may first attempt to negotiate one of the following options with your lender:
Loan restructuring
There are companies that specialize in loss mitigation that can help you negotiate with your lender to get your mortgage in good standing again. There techniques available to get a modification approved, such as a separate payment plan for your delinquencies, or adding your delinquent amount to the end of your loan. You may qualify for a loan restructuring plan, particularly if you have recently had a reduction in your income or increase in living expenses. Sometimes it is even possible to get your monthly payment lowered.
Short sale of your home
Realtors who specialize in short sales can assist you in selling your home before it gets to the foreclosure phase. In this scenario, the short sale specialist negotiates a short sale with your lender on your behalf. The loan company would accept less than the amount you owe, but they would avoid a costly foreclosure process. If the short sale is unsuccessful, an experienced real estate agent can arrange for you to simply give the property back to the lender and walk away not owing anything. This procees doesn’t do as much damage on your credit report as a foreclosure.
There are some things that can be done with the assistance of a short sale real estate agent:
- Reinstatement – Getting your loan back into good standing by paying all of your past due amounts. This option may not be feasible if your financial stress that caused the deliquency hasn’t improved.
- Mortgage Refinance – Refinance your total debt load, or extend the term of the loan to reduce your payments. However, this is not a viable option if you owe more on your home than it is currently worth. If you have received an NOD already, then you may not be able to negotiate a loan modification, workout, or refinance. Allowing the bank to foreclose or considering bankruptcy should only be considered a last resort.
- Bankruptcy – You may qualify for Chapter 7 Debt Elimination or Chapter 13 Reorganization. A bankruptcy stays on your credit report for 10 years.
- Foreclosure – This is the most damaging to your credit other than bankruptcy. The mortgage company will take your home and equity. This stays on your credit for seven years.
In these hard times, many homeowners are benefiting from the help of seasoned real estate agents who specialize in avoiding foreclosures. They regularly negotiate the options above, helping their clients avoid the ramifications of a foreclosure.
Tips to avoid foreclosure
Don’t ignore the problem
The further behind you get, the harder it will be to get your loan into good standing and avoid foreclosure. Contact your loan company as soon as you realize you will have trouble making your payment. Lenders want to be in the money business, not the real estate business – so they don’t want your house. They all have available options to help borrowers through tough financial difficulties.
Open and respond to mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later notices from your mortgage company may include important information about pending legal action – it’s important to read these. Failure to open your mail is not a viable excuse during foreclosure proceedings.
Be aware of your rights
Find your original mortgage documents and actually read them so you know exactly what your lender might do if you don't make your payments. Learn about the foreclosure laws and time frames in your state.
Watch your spending
Besides health care, holding on to your home should be your first financial priority. Review your budget and look for areas you can reduce spending so you can make your loan payment. Look for optional expenses – cable TV, memberships and entertainment that you can eliminate.
Contact a real estate company that specializes in loss mitigation
If you are unable to make you mortgage payment and are in jeopardy of losing your home, contact a reputable loss mitigation company to help you by negotiating with your lender to resolve your situation.
Documents you will need
Here is a list of documents that are usually required for loan resolution, although this list can vary considerably with each situation:
- Hardship Letter – A letter from you to your lender explaining why you are having trouble making your payments.
- Financial Statement – This shows where your money goes and how much is left over after paying your bills. An experienced short sale agent can provide the appropriate forms to itemize your finances and show hardship.
- Bank Statements – Last two months of bank statements – checking, savings, etc.
- Mortgage Statements – For all loans associated with the property, you need to collect the most recent mortgage statement & account number.
- Pay stubs – Last two months of pay stubs, or proof of unemployment.
- Tax Returns – Last two years of tax returns including W2’s.
Once all of these financial documents are organized, the negotiation with your bank can begin.
What to do next
- See if you qualify to do a short sale.
- Get referred by an expert Vacaville real estate agent to an agent near you.