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When Foreclosure Knocks
By sharon | June 6, 2008
When distressed homeowners receive call from their mortgage lenders, they usually end up panicking and not thinking clearly. Because of this, most of them think that the only way to address this problem is to cry and wait for the eviction notice.
Much later, they will realize that there were actually many options available for them including the following:
- Refinancing/Restructuring – this option requires homeowners to talk to their lender and explain their financial situation instead of ignoring the letters and calls from their lenders. If your lender agrees to refinance or restructure your existing mortgage loan, you will most likely be able to keep your home and avoid foreclosure.
- Deed in Lieu of Foreclosure – if you do not have much equity tied to your home, you could always to give up your home to your lenders and they will call it quits. Although, you must know that this will appear on your credit report. Still, it is certainly better than a foreclosure record.
- Short Sale – one of the options, which is increasingly becoming more popular, is the short sale. Lenders will agree to sell the home based on the current market value. If the loan amount id bigger than the proceeds, the difference will be shouldered by the homeowner plus corresponding taxes.
- Hard Money Lenders – although this option is effective, you must be very careful when choosing a hard money lender. In most cases, you will be charged with a higher-than-market interest rate and stricter payment terms. If you are looking at this option, make sure that you can really afford it.
- Bankruptcy – another option that is gaining popularity these days is bankruptcy. This is usually the last option to be considered since it goes down on your credit report. You should consult a bankruptcy lawyer in order to find out whether a Chapter 7 or Chapter 13 will address your needs.
Keep in mind that these foreclosure options should be considered if you have tried everything to avoid this situation such as cutting back on expenses, looking for extra income, borrowing money and even selling some of your stuff.
Topics: Foreclosure, Foreclosures by State |