As the nation’s foreclosure rate remains stable, Idaho’s foreclosure rate is declining slightly. In Idaho, there were 569 foreclosures in April, 542 in May, and 501 in June 2007. Even with the slight decline in the foreclosure rate in Idaho, the number of foreclosures in the nation remains high.
Foreclosure is the result of not making your monthly mortgage payment to your lender. The truth is, financial hardship can happen to anyone, so knowing your options when it comes to the foreclosure process is knowledge everyone should consider.
These are some of the typical financial hardship situations that lead to foreclosure.
- I have health problems and I can’t pay my mortgage
- My real estate market has changed and now I can’t sell my house
- I had a death in my family and now I can’t afford to keep my house
- I lost my job and now I can’t pay my bills
- My mortgage payment just increased and now my payments are too high
- I am going through a divorce and I need to sell my house fast
- We just had a new baby and we can’t afford to keep our house.
- Our medical bills are too high and we can’t sell our house.
Here are some options when it comes to avoiding foreclosure:
Reinstatement Plan for your Existing Mortgage:Reinstating your existing loan is simply paying all of your past due payments, including monthly principal and interest payments, late fees, and attorneys’ fees. If you can show your lender that you can make up your missed payments in one lump sum, then your lender will consider reinstating your loan. Some possible sources of restitution money are close family members, relatives, retirement accounts, tax returns, and in some circumstances, credit cards.
Payment plan with your current lender:If you have encountered a short-term hardship or financial hardship and are able to pay off your past-due mortgage over time, then your lender may consider you for a payment plan. A payment plan is nothing more than making your existing mortgage payment plus a portion of your late payment each month. For this option, you will need to be able to pay 20-50% of your total missed payments up front. Then, over the next 12 to 24 months, you’ll need to pay your regular monthly mortgage, plus the rest of your missed payments. Consider this option if you can afford more than your monthly mortgage payment, can pay 20-50% of your missed payments now, and your financial hardship was short-term.
Loan Modification:Some lenders will allow you to restructure your loan to stop the foreclosure process. If you can pay your monthly mortgage but can’t pay your missed payments, then restructuring your loan may be an option. A typical loan modification will add your missed payments to the end of the principal on your existing loan. Loan modifications can change your current interest rate and extend the term of your current loan. Your monthly loan payment will change, so you’ll need to make sure you can afford the new monthly mortgage payment.
Refinance your home:Depending on how long ago you bought your home and your local real estate market, you may have enough equity in your home to refinance. When refinancing your home, consider it a long-term solution to stop the foreclosure process. Get a loan broker or loan officer recommendation from a friend or family member. Typical refinancing costs are between 2% and 4% of the loan amount. Loan fees pay for things like the appraisal, lender fees, filing paperwork, and obtaining your credit report. Stay away from loans with prepayment penalties and adjustable rate mortgages.
Pre-Foreclosure Sale:A pre-foreclosure sale is simply selling your home before your lender repossesses it and sells it at public auction. Each state has its own foreclosure laws, and therefore each state has a different foreclosure schedule. In Idaho, once you are 90 days delinquent on your monthly mortgage payment, your lender makes it public. Most foreclosure notices are published in your local business newspaper. In Idaho, the lender typically repossesses your home 4-6 months after the foreclosure notice. If you can Sell your house fast before the lender takes your property, then do so. To sell your home fast, consider getting a free, confidential, no-obligation offer from a local real estate investor.
Sale of shorts:If you don’t have enough equity in your home to sell it, pay your mortgages, and cover the cost of the sale, then a short sale could be your solution. A short sale can be time consuming and complicated, but it should be considered a viable solution to avoid foreclosure. Simply put, a short sale is negotiating with your lenders to accept less than what is owed on your mortgage. If you have a first and second loan on your home, you have a much better chance of doing a short sale with the second lien holder. This is because if the lender repossesses the property, the first lender gets to keep the property. The first lender will then sell your home at public auction and any money left over after the sale will go to the second lien holder. I would not suggest trying to complete a short sale yourself. Having an experienced short sales professional on your side can make or break a short sale deal. There are many details and paperwork involved in short sales. It definitely takes someone who knows the short sale process and the paperwork to be successful. One of the most important factors in starting the short sale process is having an offer from someone to buy your home. Lenders will not begin processing your short sale paperwork until you have a signed bill of sale for your home. This is why I would suggest contacting your local homebuyer. Very few real estate agents know the process of a short sale, or even what it is. Also, listing your property and waiting for an offer takes away valuable time needed to complete the short sale process. Real estate investors don’t charge you anything to buy your house, you sell your house to stop the foreclosure process, and the bank doesn’t have to go through the whole foreclosure. Everyone wins in a successful short sale.
Deed-in-Lieu of Foreclosure:This is your last option before foreclosure. To be considered for a deed-in-lieu of foreclosure, you can only have a mortgage on your property. Your lender generally requires that you have recently tried to sell your home and that your home must be in good condition. Lenders will not always take a property back and get you out of debt.
Unfortunately, many of your choices will have long-term consequences on your credit that you should be aware of. Therefore, I recommend speaking with a real estate professional about your foreclosure situation.
Many times, the best way to avoid foreclosure is to sell your home quickly. You can quickly sell your home to a real estate investor to stop the foreclosure process. Here are some of the benefits of selling your home fast to a professional homebuyer.
- They can make up your late payments
- They can take over your loan
- They can buy your house fast, on the date you choose
- They can work with the bank to complete a short sale
- You can sell your house quickly and rent it back to the real estate investor
