In today’s tough economic times there are thousands of Nevada home owners in financial difficulty and for a number of reasons. Loss of job, Illness, decreases in income or health reasons are among the reasons. The plain hard fact is very little of it is the home owners fault. Some have said that this has been the perfect financial storm. Following are nine ways to avoid foreclosure or at least delay the inevitable.
1) REINSTAEMENT: Bring the loan current. This means to pay all late payments fine and penalties in full. Most people do not have the cash to do this and when they do there is a big chance they will fall behind again unless some thing has drastically changed.
2) FOREBEARANCE: This is a temporary repayment plan. The lender usually moves all the late payments, penalties and fines to the end of the loan. This is a band aid not a cure
3) REFINANCE; this is a new loan with a reduction in payments. Several things need to happen here. The home needs to appraise in order for the lender to even consider this avenue. Most homes have fallen in value during the last few years as much as fifty percent. Unless you pt a large amount of money down you will not be able to refinance.
4) LOAN MODIFICATION; getting your lender to modify your current loan. Many times it requires the lender to reduce the principal as well as the interest rate and increase the term as well. You may here some real horror stories from people that have tried this avenue. I will add that lenders are slowly starting to accept this method over other options available to them.
5) SELL THE PROPERTY; Sell your home and use the equity to pay off your mortgage. The problem here is that very few home owners have enough equity in their homes to accomplish this method.
6) RENT THE PROPERTY; you must bring your loan current when doing this. If you are lucky enough to rent it to cover your payment and expenses that is great. If there is shortfall between the rent and your payment you must make up negative cash flow created here. Caution if you do this and do not make your payments on the house and do not send the rent money to the lender this can be viewed as fraudulent.
7) SHORT SALE; Sell your home for less than what you owe on it and negotiate with the bank to accept less than the loan amount. I highly recommend that you consult with a Realtor. If you choose a short sale. There are many advantages to this method especially if the home is your primary residence. Make sure your realtor is qualified to do short sales. If they do not have their CDPE designation they are probably not equipped with enough knowledge to do the right things for you
8) DEED IN LIEU OF FORECLOSURE: This is considered the friendly foreclosure method. You get your bank to accept the title to the property and they accept this as full payment. Consult with an attorney as the lender may come after any deficiency.
9) BANKRUPTCY: This will only force stall the foreclosure.
These are the nine ways to try and avoid foreclosure I recommend that you consult with an attorney or an accountant. When ever possible consult with a Realtor with the CDPE designation.(Certified Distressed Property Expert) . In the very near future lenders will require your short sale Realtor to have a CDPE designation. If you have any questions or would like to talk to a CDPE Realtor feel free to contact us. Written by Buck Schaeffel of Bowler Realty.
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