How to Avoid Foreclosure?
It’s an epidemic that many families are facing in today’s market. While most of the news reports are telling you why your in foreclosure, I wanted to give you some practical tips to avoid foreclosure on your home.
Foreclosure Tip 1
Contact your lender and make a forbearance agreement. A forbearance agreement allows you to either lower your monthly payments or extend the length of your loan. For those who have a mortgage with an adjustable rate mortgage that is about to reset, contact the lender and see if they are willing to convert the mortgage into a fixed rate that you can afford. Believe me it is better to communicate early with your lender before you get to far into the foreclosure process.
Foreclosure Tip 2
If owe more than your home is worth, contact your bank and see if they would allow what is called a short sale or a short payoff. A short sale allows you to sell your home for less than the actual loan balance. Many times getting a 10 to 20 percent discount is not difficult if you can prove your case to the bank. You would have to justify your request by providing proof that you can no longer afford the monthly payments yourself. The market value would also have to be verified. If you owe $200,000 on your loan, but the actual market value at the time you are trying to sell is only $150,000, than you are a perfect candidate for a short sale.
Foreclosure Tip 3
If your credit has not yet been damaged and you have sufficient equity in your home you may be able to refinance the balance of your loan. In you are in a really tough spot and your credit has already been ruined, you can try to get a hard money loan. Hard money loans are loans provided by private investors looking to make a good return on their money. The interest rates are very high, but if you have sufficient equity that you do not want to lose, it is not a bad short term fix. You will need about at least40% equity for this loan to work because it is an equity based loan. In desperate situations, it will buy you time until you can sell or refinance to a lower rate at a later date.
As I stated earlier, it is a bad idea to ignore the situation. The earlier you attack the problem the more options you will have.
Eric Medina
Founder of Credit Medic
If you have further questions about your credit situation contact me at http://911creditmedic.com
