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KEEPING THE PROPERTY
VS. SELLING THE PROPERTY |
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If
your monthly house payment (including property taxes and
insurance) does not exceed 40% of your gross monthly income, it
should be possible for you to keep the property. If the payment
is greater than 40% of gross monthly income, consider selling or
transferring the property to avoid negative impacts to your
credit. The objectives in order of importance should be: |
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Keeping the property if possible. |
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Don't give away equity if you can keep it or liquidate and put
it in your pocket. |
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Minimize damage to your credit. You will need it later on. |
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LENDER WORKOUT |
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Before exploring new options, have you tried to come to terms
with your existing lender? Lenders want the loan to be current,
not to have to complete a foreclosure. Can you make up the
defaulted amount over a period of months? Can you re-write the
note and include the defaulted amount? Can you give the lender a
deed-in-lieu of foreclosure and preserve your credit? These are
questions you should ask yourself and possibly your lender if
you haven't done so already. They will want to know why the loan
is in default and why you think you will be able to make the
payments in the future. Temporary financial setbacks that have
since been cured are the best candidates for this. Your lender
will probably not be inclined to stop foreclosure proceedings if
they have reason to believe they will have to start again in 6
months. |
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REFINANCING
AND NEW JUNIOR LOANS |
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Basic lending guidelines will require all home loans will total
up to less than 75% of the current market value of the property.
If you have more equity than that, you should have no difficulty
in obtaining a new refinance or 2nd Trust Deed to bring your
loan current. Expect higher interest rates and loan fees. |
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LOANS TO GET YOU
CURRENT |
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If
you experienced a temporary financial setback that has since
been cured and are going to be able to keep the property, first
consider family and friends for a loan to get current. It's much
cheaper than hard money loans, but MAKE SURE you will be able to
pay them back. You do not want to put them in the position of
having to foreclose to get their money back. Hard money loans
are typically private investors who will lend money based on
equity in the property. Credit and income are not issues of
importance and loan approval is usually a matter of days with
funding following shortly. Loan amounts will usually be enough
to bring existing loans current, pay the financing costs and put
some money in your pocket. Loans will be amortized over 30 years
to keep the payments lower and the balance will be due in 2 to 5
years. |
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BANKRUPTCY |
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This is a major step that will have lasting impact on credit
reports. Seek appropriate legal advice. If the Notice of Default
has just been filed on your home, you have sufficient time to
explore the options for new loans or selling the property. If
the foreclosure sale is going to be held very shortly,
bankruptcy is a very common way to delay the sale. When you file
bankruptcy, your financial matters fall under the jurisdiction
of the courts which could limit your options. SEEK LEGAL ADVICE. |
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THERE ARE MANY
PEOPLE PROMOTING "STOP FORECLOSURE" PROGRAMS THROUGH DEBT
CONSOLIDATION AND/OR BANKRUPTCY. SOME PROMOTE THEMSELVES AS
FORECLOSURE CONSULTANTS OR FORECLOSURE SPECIALISTS. IF YOU ARE
GOING TO USE ONE OF THESE SERVICES, LOOK FOR ONES THAT CHARGE
FEES ON COMPLETION OF SERVICE INSTEAD OF UP-FRONT FEES. THIS
PROVIDES YOU A GREATER PROBABILITY OF GETTING WHAT YOU ARE
PAYING FOR. BE CAREFUL AND GOOD LUCK!! |
