Are You Behind on Your Mortgage?
Unsure What to Do Next?
It only takes a few missed mortgage payments to put the house you worked so hard for in danger of foreclosure.
So what are the smartest steps to take if you’re already facing pending foreclosure or just afraid you might be headed there? If you don’t react proactively you will eventually lose your property. So don’t procrastinate – take action immediately!
What to Do First
Before you decide how to handle your situation, we want to make sure any notice you got from the bank or mortgage company fits within the required time. Generally, if a lender fails to properly notify the homeowner with a certified delivery of a Notice of Default (NOD) at the owner’s most recent address, you can petition to delay your foreclosure and seek relief. We want you to know your time constraints.
What are My Options?
Can I Prevent the Foreclosure?
First of all, even though you dread the phone call, CONTACT THE LENDER. We’ve been doing this a long time. Take it from us. The lender does not want to foreclose on your house. They just want to be paid. But if they can’t get paid, you will lose your house.
Often good communication with the lender can lead to relief through one of several methods:
- Loan Modification
- Short Sale
- Bankruptcy (Not recommended)
A Loan Modification typically involves a reduction in the principal balance, interest rate or an extension of the length of the term of the loan. In some cases a different type of loan or any combination of the three. A lender might be motivated to modify a loan because the cost of doing so is less than the cost of default or foreclosure.
Negotiating with the bank for a modification of your home loan can be an overwhelming process for many homeowners. We find that while many homeowners have the aptitude to deal with the lender, they sometimes lack the perspective of a third party. They also tend to take care of an immediate problem but in a way that kicks the can down the road and costs them more in the long run than if they take action on their house now.
There are services that will negotiate with the bank for you, but you can’t afford them because you’re having a financial crisis! We will not negotiate with the bank on your behalf, but we will give you our honest opinion and tell you what our experience has been in situations similar to yours.
We find that given the right information, our clients have done well with the banks. Just having the confidence that you are working with an experienced professional enables you to make better decisions. We emphasize with our clients that sooner is better when it comes to contacting the bank.
One more item to consider is Adjustable-Rate Mortgages (ARM). For homeowners facing an upcoming adjustment in their payments due to an ARM, it’s not a good idea to take on your lender alone. Time is not your friend with any foreclosure, but with an ARM, the costs of waiting could be extra painful.
A Forbearance agreement provides short-term relief for borrowers who have temporary financial problems, to delay a foreclosure. In our experience, a Forbearance is only possible when there are financial alternatives available to the homeowner which would have prevented them from facing foreclosure in the first place had certain unfortunate events not taken place. Sometimes it makes sense for that homeowner to sell his home, other times not. We can give input on what the best course of action is.
A short sale is a home that is available at a purchase price that is less than the amount owed by its current owner. The transaction benefits the lender by avoiding repossessing the home in foreclosure, which is expensive and time-consuming. The seller avoids the credit hit that comes with foreclosure and the bankruptcy that sometimes accompanies it.
A short sale is a financial option that is sometimes available to homeowners who are distressed borrowers. They are behind on their mortgage payments and have a home that is underwater. That is, the home is worth less than the outstanding balance on the mortgage. The homeowner is forced to part with the home. There are really only two options: A short sale or foreclosure.
The lender who holds the mortgage must sign off on the decision. Additionally, the lender needs documentation that explains why a short sale makes sense to the lender. Proof of financial hardship is also required of the homeowner by the lender.
If approved for short sale, the buyer negotiates with the homeowner first and then seeks approval on the purchase from the bank second. It is important to note that no short sale may occur without lender approval. That sounds simple, but usually, the bank requires the house to be listed by a realtor.
Short sales tend to be lengthy and paperwork-intensive transactions, taking up to a full year to process. However, they are not as detrimental to a homeowner’s credit rating as a foreclosure is. A short sale looks better to future lenders and creditors. It shows that the person took action before the bank moved to repossess the home. A homeowner who has gone through a short sale may even be eligible to purchase another home immediately.
But in our experience, short sales don’t usually work out for the homeowner. The main problem is the lender not indicating whether the short sale is approved until the last minute. This makes planning by the homeowner extremely difficult because of the lack of financial resources for basic living. We rarely have seen it work out well for the homeowner.
Many people think filing for Bankruptcy is the right move in a foreclosure situation. This can legally stop the foreclosure process. But bankruptcy isn’t the ideal route to take. In most cases, bankruptcy is a band-aid, and essentially just buys you more time (at a cost). Usually, in the end, you will still end up saying goodbye to your home. And you will be dealing for years with a bankruptcy on your credit record. The worst part is you could still end up owing money after your house is sold if the sale doesn’t cover all the costs.
What is Your Best Option?
Your best option may be to sell your home while there is still time and before you are too deep in the foreclosure process. You generally have two options:
Retail Sale through a Realtor
You can sell your home in a Retail Sale with the help of a real estate agent, or sell it to an Investor for cash in a short amount of time.
Selling your home in a retail sale works best if your house isn’t in need of any major repairs, homes are selling quickly in your area, and you have time to wait for it to sell. If your house is in good condition you may be able to recover some of your equity.
If you don’t have the time and money required to sell your home with a real estate agent, it may be better to sell to an investor like U.S. Direct Home Buyers. you typically aren’t responsible for making any repairs on the property, you can sell for cash (no waiting for a retail buyer to qualify for a loan) and usually close within a week. This is the ideal situation for someone who needs to move quickly to prevent foreclosure or lacks the money to carry the house during a retail sale.
Selling for Cash to an Investor
If you’re already struggling with foreclosure it’s likely that you’re being contacted by lots of investors promising you fast cash for your home, and you’re probably wondering “Who are all these guys?” – and you are right to be concerned about disreputable people who aren’t able to actually buy your home.
Louisiana Direct Home Buyers will buy your house fast for cash and even help you in situations where your house doesn’t have equity. We’ve helped millions of property owners just like you and we can help you get on with your life after facing foreclosure.
With a foreclosure, time is money. Don’t let this situation haunt you and your credit report for years to come. See our blog series on Foreclosure, or Short Sales. Work with us and we’ll let help you find relief to your financial stress while there’s still time.
Call us today and let us help you decide your best option for solving your problem.
|Protective Home Solutions is a division of Louisiana Direct Home Buyers|
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Protective Home Solutions is a division of Louisiana Direct Home Buyers that seeks to solve problems for homeowners behind on their mortgage and facing foreclosure. We seek first to identify the problem, see where we can help, and if it makes sense for the homeowner to sell to us, tell the homeowner what we can do.
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