Act Now to Forgo Foreclosure

Whether you are an investor or a homeowner, if you are facing difficulties with your mortgage, remember that the ultimate goal is to maintain your credit rating. You may be able to negotiate with your lender, you may be able to refinance, or you may be forced to sell your home now in order to buy one in the future, but the sooner you address the issue the more options you will have.

By getting your finances in order you will be able to get on with your life sooner. Don’t add to your stress by ignoring your fiscal situation; follow these steps to getting back on track:

Know the details – go over all your loan documents so that you are prepared for any upcoming resets or changes. When will your payments increase? By how much? Can you refinance? What kind of penalty would you face, if any?

Cut in other areas – can you take a roommate or a second job to help make your payments? You may need to look at significant changes in your spending and lifestyle. Do not make any major purchases at this time, and look at liquidating other assets, such as cars or boats, to help meet your payments.

Contact your lender – You should take the initiative with your lender. Contact them before the problem becomes overwhelming. If you receive calls or letters from your lender, respond to them as soon as possible. Do not wait to get too far behind – lenders are less likely to move quickly into foreclosure if you are proactive. You want to speak to the right people – ask for the loss mitigation or collections department. Be honest with them about your situation and don’t make promises you can’t keep.

Beware of foreclosure “rescue” scams – There are a number of scam artists targeting people in neighborhoods where foreclosure rates have been high. They approach troubled homeowners with promises to help them keep their houses. These “rescues” often come with payments that are out of reach of the average homeowner and result in homeowners being defrauded of their homes, sometimes still owing the original mortgage amount.

Any company that approaches you with such an offer should be checked out through the Better Business Bureau, your state real estate commission and Attorney General.

Do not sign anything without reading it all, get all promises in writing and ask your attorney or a financial professional to review any paperwork before you sign it.

Call a nonprofit group offering free housing advice for more information and counseling. They may be able to help you with your options.

If all else fails, negotiate a short sale – if you have missed more than two payments but your home has not yet gone into foreclosure you may be able to sell it for a price that falls short of what you owe the lender. If your mortgage holder agrees to accept the price and forgive the rest of your debt, they forgo the pricey foreclosure process and you walk away with minimal damage to your credit score.

You can chalk it up to experience, save up a down payment and start over again when the time is right.

Don’t Be Ripped off! Avoiding Foreclosure by Refinancing Your Home is a Sucker’s Bet

Most people think a good way to avoid foreclosure is to start over…..refinance the mortgage and just start over.

The problem is most people facing foreclosure cannot refinance.

Stopping foreclosure is very difficult. Unfortunately, you will run into all kinds of mortgage brokers and lenders out there who will tell you what you want to hear and waste your time. Time is something you can’t afford to waste when you are trying to avoid foreclosure. You only have about 4-8 months after missing your first mortgage payment until you lose your house. The foreclosure process varies by state and lender.

Unscrupulous mortgage brokers and lenders have always preyed on people in trouble. There is no way they can get you refinanced but they tell you they can help stop foreclosure.

Why would they do that? They don’t get paid if you don’t close, so why would they take your application and keep you from looking at other options?

Unscrupulous mortgage brokers train their staff to just bring in the business…..get as many applications as they can. Some companies even have sales meetings to enforce getting applications even if they don’t close. This would surprise you but some mortgage companies live by the rule “throw everything against the wall and see what sticks.”

You are in a very scary situation and you are treated like everyone else. You were never going to “stick” in the first place but now a month or two has gone by and you are even further behind on your mortgage payments.

Some mortgage brokers or lenders make money off of you by taking a fee up front. They know for a fact that no one can refinance your mortgage, but they tell you for a fee up front they will start working on your loan.

Quite a nice business model don’t you think? They tell you everything you want to hear when you are trying to avoid foreclosure. They collect a fee because you believe them and they move on to the next unsuspecting person. Not another minute will be spent on you after they get your money.

Who can refinance to avoid foreclosure?

You need equity in your home. Depending on how far you are in the process, you may need at least 25% equity in your property. The farther you are in the foreclosure process, the more equity you will need. If you are more than 2 payments behind and you don’t have at least 25% equity, it is almost impossible to refinance. Make sure when you are calculating the equity, you factor in all the late fees and legal fees.

Speaking of how far along you are in the foreclosure process, that makes a huge difference when refinancing. Once you are more than 90 days late on your mortgage, everything changes. The rate will dramatically change if you can even refinance at all after that point. That is why it is so important to pick the right mortgage broker or lender, because if they are not experienced in these types of loans, they can take too long and you will pass the point of no return.

Some private party lenders may be able to refinance you to avoid foreclosure. These are typically known as hard money lenders. They decide if they will lend you the money personally. There are no underwriting guidelines. It is a case by case basis. These can be very expensive. The rate and fees will probably be so high you won’t be able to afford it.

That brings up an important point. Even if you can refinance, what is your new payment going to be? If you are having trouble making the payment now, the payment is guaranteed to be more because you are trying to avoid foreclosure by refinancing. Any loan you get will probably be too expensive.

If you do not have equity in your property do not even consider refinancing your home to avoid foreclosure. You will end up wasting valuable time and money to find out no one can help you. Instead, seek the advice of a reputable attorney and see if you can work something out with your lender.

Good Luck!

Act Now to Forgo Foreclosure

Prior to the mortgage crisis of 2008 and the recession that followed, lenders had been offering mortgages with low teaser rates for the first few years. While these low rates allowed thousands of homeowners to afford a new home, there are now many home owners holding loans with these low starter rates that have either reset or are about to. Many home owners now find themselves in a position where they cannot afford to make their new monthly payment.

Act now to forgo foreclosure.

If you find yourself in this position, and are facing difficulties with your loan, remember that the ultimate goal is to maintain your credit rating. There are a number of actions you can take.

Some options to consider to avoid foreclosure.

If you find yourself in this situation, you may be able to negotiate with your lender, you may be able to refinance or you may be forced to sell your home now in order to buy one in the future. The sooner you address the issue the more options you will have. By getting your finances in order you will be able to get on with your life sooner.

Don’t add to your stress by ignoring your fiscal situation; follow these steps to getting back on track:

Know the details.

Go over all your loan documents so that you are prepared for any upcoming resets or changes. When will your payments increase? By how much? Can you refinance? What kind of penalty would you face, if any? Cut in other areas – can you take a roommate or a second job to help make your payments? You may need to look at significant changes in your spending and lifestyle. Do not make any major purchases at this time, and look at liquidating other assets, such as cars or boats, to help meet your payments.

Contact your lender.

You should take the initiative with your lender. Contact them before the problem becomes overwhelming. If you receive calls or letters from your lender respond to them as soon as possible. Do not wait to get too far behind – lenders are less likely to move quickly into foreclosure if you are proactive. You want to speak to the right people – ask for the loss mitigation or collections department. Be honest with them about your situation and don’t make promises you can’t keep.

Beware of foreclosure “rescue” schemes.

There are a number of scam artists targeting people in neighborhoods where foreclosure rates have been high. They approach troubled homeowners with promises to help them keep their houses. These “rescues” often come with payments that are out of reach of the average homeowner and result in homeowners being defrauded of their homes, sometimes still owing the original mortgage amount.

Any company that approaches you with such an offer should be checked out through the Better Business Bureau, your state real estate commission and Attorney General. Do not sign anything without reading it all, get all promises in writing and ask your attorney or a financial professional to review any paperwork before you sign it.

There are nonprofit groups offering free housing advice for more information and counseling. Make sure they are legitimate and give them a call. They may be able to help you with your options.

If all else fails, negotiate a short sale.

If you have missed more than two payments but your home has not yet gone into foreclosure, you may be able to sell it for a price that falls short of what you owe the lender. If your mortgage holder agrees to accept the price and forgive the rest of your debt, they forgo the costly foreclosure process and you walk away with minimal damage to your credit score. You can chalk it up to experience, save up a down payment and buy low.