Facing foreclosure is frightening. You finally were able to buy a home and now you are afraid that are not going to be able to make the payments. No matter what the circumstances are that brought you to this point it is good to realize that you are not alone in this predicament.
There are millions of Americans that are saddled with Adjustable Rate Mortgages (ARMs), others that have lost their jobs, some who have insurmountable medical bills, and more who just find themselves drowning in a sea of debt.
This may not sound like good news and it isn’t, but there is at least some news of interest here. Due to the fact that financial troubles are in every city and in every community the options for people have drastically increased. However, it is up to you to find out what your options are. Certain options will be obvious because lenders or others will be presenting you with them, but do some research on your own is recommended.
It is not impossible to prevent foreclosure, but the sooner you begin working on a solution the better your chances are of finding one. If you are able to reach a resolution then you can avoid many of the hassle that go along with the foreclosure process. Normally the proceeding is published in a local newspaper. Your home will auctioned or sold. If you do not voluntarily leave the house you will be evicted, and your credit rating will take a big hit.
The government organizations that are responsible for housing and lending continue to promise that solutions are on the way, some lending institutions have agreed to help certain loans by freezing their interest rates, and there are various new ways to refinance troubled mortgages.
The more you know the better your chances are of making informed, intelligent decisions. Credit counselors and housing specialist have a few tips to help homeowners through this difficult process.
Do your due diligence.
Housing specialists claim that the explanation many homeowners wind up with unaffordable loans is that these individuals either were not aware of the terms and conditions of their loans or that they were actually conned by predatory lending institutions. If you were not properly informed when you obtained your mortgage, make certain that you do not repeat the very same mistake again. For fundamental advice concerning refinancing, read the materials provided by the U.S. Department of Housing. Numerous states have also published advice for distressed property owners on their websites.
Contact your lender before you fall behind
Once you have fallen behind on your payments, you lose the power to negotiate. Many of the programs that have recently come available are designed to help people prevent foreclosure. If you wait until you have a credit problem then you will not be eligible for many of these programs. Some banks have agreed to suspend the foreclosure process for a certain amount of days if they are contacted in time.
Open all of your mail
No one likes getting bad news, and when you are heading toward financial troubles your tendency can be to let letters pile up. Some lending institutions have recognized that homeowners are not taking the preventive steps in time. In an effort to help they have begun writing the loan holders to offer assistance before the actual trouble begins. Be sure to open all of your mail from your lender. It could possible be a lifeline.
Find a housing counselor
Non profit organizations, the U.S. government, and congress all have set up organizations to help with the housing problems that people are facing. With a little research you should be able to locate a free or very low cost counselor that can help walk you through options that are available to you during a housing problem.
Don’t expect an immediate fix
This problem will not go away with some quick fix. One phone call is not going to resolve the issue. Lenders are willing to listen and to offer assistance when possible but it will take persistence to actually speak with the person that is responsible for servicing your mortgage. It is your home and you should be prepared to put in some long hours to find options and solutions for addressing this problem.
Consider getting legal help
It is always beneficial to be proactive when confronted with problems. You may want to consider contacting a lawyer. Getting expert legal advice can help you to get to the bottom of issues as quickly as possible. An attorney can help you navigate difficult paperwork and they can also let you know what your rights are should the house go into foreclosure.
Find out if you qualify for special assistance
There are special programs that have been set up for members of the military community. If your credit rating is still good, you may be able to qualify for special assistance. There is also a federal program that was set up to help homeowners that have adjustable rate mortgages refinance with a fixed rate.
Bankruptcy does not solve all of your financial problems
Be careful not to think that by filing bankruptcy all of your problems will be over. In some cases filing for bankruptcy will stop or at least slow down the foreclosure process, but its effects are limited. Be sure to seek advice from a legal professional before making snap judgements.
Be prepared to make some sacrifices
There are some steps that you can take that can help when you sit down to talk with the bank. Doing away with non-essentials such as cable TV or manicured nails will certainly give you credibility when you take a seat to renegotiate. Consider if there are assets like jewelry or automobiles that you can liquidate in order to bring some money to the table. The people that are responsible for servicing your loan would like to see that you are willing to make some sacrifices. Make the effort to prepare detailed expense reports, compile your pay stubs, and tax returns.
Familiarize yourself with mortgage solutions
The ideal solution would most likely be to refinance into a long-term home mortgage with a reasonable interest rate, but presented with the increasingly difficult requirements around buyer credit score ratings, you might not get approved for this possibility. If you are already struggling financially it also may be hard for you to come up with the money to pay the fees associated with this. Unfortunately, many refinance options have practically disappeared.
A repayment plan is less complicated to get and will likely give you temporary room to breath. In this particular situation, the lender adds a portion of the amount overdue onto subsequent monthly payments, potentially after requiring some of the past due amount in advance. Nevertheless, a number of consumer advocates think that repayment plans are not long term solutions and are only delaying the inevitable. For this reason many people advise against repayment plans if you have a subprime adjustable rate mortgage.
Loan modifications are better options for some homeowners. With a loan modification the lender can either reduce the interest rate or they can extend the amortization schedule. Sometimes they can do both.
Depending on how you feel about your house, giving it up may be your last resort. If you owe more than it is worth, you may be able to work out a deal with the lender that may allow you to sell your house and forgive what is still owed. The lending institution saves all of the expenses associated with the foreclosure process, and you avoid the stresses that this can cause.
Another way that you can avoid foreclosure is to relinquish your deed to the lending institution before they begin the foreclosing process. This option is known as presenting a deed in lieu of foreclosure. It is not required that banks accept your offer, but if they do then you willingly transfer the title to your property and evacuate the premises immediately.
Despite losing your home you are at least able to avoid the embarrassment and stigma of a foreclosure.
Discuss your situation with a local real estate expert
Fastlane Property works with a team of real estate experts that are very experienced with the processes involved in foreclosure. They are also know the local housing market very well. Give us a call and we will be happy to point you in the direction of some helpful resources no matter what situation you find yourself in.