In this ever changing Real Estate market homeowners must be aware of all their options. In order to completely understand these options, you must know what each means and what the process involves. You often hear words tossed around like short sale , deed-in lieu. modification and repayment plans. These are all very different and require certain criteria to qualify.
Short Sale - This allows a customer to sell the home for fair market value and use the proceeds to pay off the mortgage even if the proceeds are less than the total owed. Sounds great right? There are requirements to qualify for a short sale. If you are sitting on loads of savings or stocks and bonds, you most likely will not qualify for a short sale. If you do qualify, you must be aware of the tax implications of a short sale. This has become a common practice so the process is becoming more streamlined and simple. Contact us today to see if this is an option.
Loan Modification- This permanently changes one or more of the terms of the original mortgage. This can include interest rate, number of years allowed for repayment or monthly payment amount. This is the best case for all parties involved. You will need to contact your lender to see if you qualify for this program.
Forbearance- This temporarily suspends regular monthly payments if the client has an event on the horizon that will increase their cash on hand. For example, you may have been awarded a judgement that will pay out in the next year but right now have no cash. A lender may grant a forbearance rather then seek foreclosure
Assumption-Some loans may be assumable. These loans can allow the seller to sell to a buyer who then assumes all the original terms of the loan. This can be a win-win situation for both parties. A new appraisal is often not required and the new buyer may be willing to take the risk based on future appreciation
Deed In Lieu-This allows the owner to transfer ownership to the lender to avoid the foreclosure process if they cannot sell the home at fair market value.
Repayment Plan- This occurs when delinquent payments are distributed over a period of usually no more than 12 months. This distributed payment is applied to the regular monthly payment making it easier to pay off late payments. This is a way to bring the account current without paying the entire balance due at one time.
Refinance-This is the unattainable Holy Grail in today's Real Estate market. This is a perfect solution but there may be problems. This requires an appraisal which may be a problem if the homes value has declined in this market. There also may be more stringent income or credit requirements since the original purchase of the property.
As you can see, homeowners do have options. Do not hesitate to contact us and we can help you navigate the process. There are ways to handle this crisis if you are an informed consumer