In talking with our clients one question comes up time and again - "What are our options?" Closely related to this is the natural next question - "So, whats the best option?" In answering these questions it would be nice if I could come back to one surefire, tried and true answer that worked for everyone in every situation. However, life doesn't usually work like that, and this is a pretty big decision for most folks.
In determining what is the best option, the first question that needs to be answered is - what is the desired outcome? If your desired outcome is to move as far as you can from the money-sucking pit of sticks that you are currently living in (or own) then a sale or short sale would make sense. However, if you really want to stay in the house then a loan modification might be the better bet. Of course, a desire for a loan modification hardly means you will actually get a loan modification, but hey, stranger things have happened.
Another thing to consider is how much money you owe on your property versus how much that property is worth. If the loan amount is close to, or even below the value of the house (meaning you have equity in the house) then you are going to have an easier time obtaining a loan modification (usually). the more equity you have in a property the easier the process will be to sell as you have the option of not needing to go through the bank short sale process. Conversely, if you are upside down on your property it becomes more difficult to obtain a loan modification. In this situation, even if you are able to obtain a loan modification, most loan modifications don't address reduction of principal. It becomes difficult for many people to pay on a mortgage for $400,000 when the house next door is selling for $195,000. I'm not saying its right for the owners to walk away in that situation, but for rational people there certainly comes a point where a ding on their credit is worth saving tens or even hundreds of thousands of dollars.
Other issues that should be fleshed out are:
1. Do you need to move?
2. Where are you going to go if you move? If optional, how attractive is that location versus your current location?
3. What are the costs to move?
4. How expensive will it be to rent? Normally, renting will be cheaper than owning (especially if you are selling an upside down house), however, that is not always the case.
5. How much time do you have to make a decision? Is there a scheduled foreclosure date?
All of the issues mentioned above should be considered before committing to a certain course of action. However, in most cases the homeowner is leaning pretty strongly one way or the other. If this applies to you, that is likely because you have already thought about your options and discussed them with friends and family. Many of the points to consider are likely things that you have also considered. The final piece of advice I would give then is just to make sure that you plan out what happens next after the short sale or loan modification. Make sure you've got a plan that makes sense, and that is best for you and your family.
As always, if you would like to discuss your particular situation you can call our office at 480 532-7999 for a free consultation.
Sunday, June 19, 2011
Saturday, June 11, 2011
Alternatives to Foreclosure Besides Short Sale
I've posted before about short sales and why they are a superior alternative to foreclosure. As mentioned in an earlier post short sales are better than foreclosures, because, well they are - read the other post! Anyways, short sales do have some drawbacks and there are some folks who would rather just not have to deal with any of it - any solutions?
As it turns out there are solutions available. In many cases our firm can skip the short sale and directly take over payments, in exchange for the property. What would the benefits be to the homeowner is this type of situation?
Benefits:
- No foreclosure on record
- No hit to your credit from a short sale
- Payments are brought current, actually improving your credit score
- Minimal paperwork, minimal hassle - you hand over your keys and wave goodbye to your headache
Essentially, the process is just like a deed in lieu of foreclosure, except instead of giving the deed back to the bank you assign it to our firm. We then bring your mortgage payments current and after a period of time will refinance into a new loan or sell to a new buyer.
Obviously, this is a pretty great deal for anyone who has little or no equity in their property, or who has major work needed to bring their property to market. However, I'm sure many of you might be wondering - what's the catch?
The catch is that since the loan is still in your name, any payments made on the loan are good for your credit. However, if payments aren't made then that also affects your credit - negatively! I would like to assure anyone working with us that we will make their payments, however, just to completely reassure you, we write into our contracts that if we miss payments that the deed reverts back to you. Meaning, either we make payments and your credit improves (as opposed to decreasing for any other option) or we bring your payments current, giving you more time to work out an agreement with the bank. Obviously, we're going to make the payments, but its nice to know that even if everyone in our company were to be simultaneously run over by a herd of water buffalo, that you would be protected.
To see if you qualify for this program or if you are just curious about your options give us a call at 480 532-7999 or visit our site at www.mcahomes.com. As always, any consultation is free.
As it turns out there are solutions available. In many cases our firm can skip the short sale and directly take over payments, in exchange for the property. What would the benefits be to the homeowner is this type of situation?
Benefits:
- No foreclosure on record
- No hit to your credit from a short sale
- Payments are brought current, actually improving your credit score
- Minimal paperwork, minimal hassle - you hand over your keys and wave goodbye to your headache
Essentially, the process is just like a deed in lieu of foreclosure, except instead of giving the deed back to the bank you assign it to our firm. We then bring your mortgage payments current and after a period of time will refinance into a new loan or sell to a new buyer.
Obviously, this is a pretty great deal for anyone who has little or no equity in their property, or who has major work needed to bring their property to market. However, I'm sure many of you might be wondering - what's the catch?
The catch is that since the loan is still in your name, any payments made on the loan are good for your credit. However, if payments aren't made then that also affects your credit - negatively! I would like to assure anyone working with us that we will make their payments, however, just to completely reassure you, we write into our contracts that if we miss payments that the deed reverts back to you. Meaning, either we make payments and your credit improves (as opposed to decreasing for any other option) or we bring your payments current, giving you more time to work out an agreement with the bank. Obviously, we're going to make the payments, but its nice to know that even if everyone in our company were to be simultaneously run over by a herd of water buffalo, that you would be protected.
To see if you qualify for this program or if you are just curious about your options give us a call at 480 532-7999 or visit our site at www.mcahomes.com. As always, any consultation is free.
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