20 Oct Options When Facing Foreclosure
Even though the housing market seems to be on the upswing and in recovery mode for most, some homeowners are still feeling the sting of adjustable rate and negatively amortized loans. When your home is about to be foreclosed upon, here are some options for you to consider.
1) Check out HAMP (The Home Affordable Modification Program)
Through HAMP, the United States Government will offers borrowers with loans that are Fannie Mae or Freddie Mac insured the opportunity to refinance into a lower rate loan. This can be a time consuming choice and can take up to one year to actually complete so the more you have your paperwork in order, the faster you can move your case through the system.
Make sure you at least have
• 30 days of paystubs or your most recent tax return if you are self-employed
• A personal debt report from one of the three major credit bureaus
• A hardship letter
2) Consider a Short Sale
A short sale is when you sell your home for less than what is owed on the mortgage. It is not as damaging to your credit as a foreclosure, but your score will be affected nonetheless. To sell your home as a Short Sale, your lender will see the amount of assets you have and whether you are already in default before determining if you are eligible. Make sure you are listing with a competent real estate professional that understands these types of sales.
3) Deed in lieu of foreclosure.
Instead of going through the foreclosure process, you are basically handing over the keys to your home. Your lender will then sell the property to try to recoup all or a fraction of the loan balance. This path is less invasive than a foreclosure but it will leave your credit as damaged as a true foreclosure.
4) Communicate with your lender
If you are having a hard time making your mortgage payment or if you have missed a payment, call your lender. If you can be honest about your situation before it gets out of hand, there will be more options than pretending like it isn’t happening.