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Avoid Foreclosure
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FORECLOSURE
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Loan Modification
Refinancing
Renting Your Home

Selling Your Home
Deed-in-Lieu
Short Sale
Bankruptcy
Trustee Foreclosure
Servicemembers
Civil Relief


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Avoid Foreclosure Options

Foreclosure is one of the most devastating financial situations that a homeowner can face. However, you may qualify for one of several alternative options listed below.

Loan Modification
A mortgage modification involves the reduction of the interest rate on the loan, the principal balance of the loan, the term of the loan, or any combination of these. The result will be a lower payment to the homeowner and a more affordable mortgage. READ MORE

Refinancing
If a homeowner has enough equity in their home and credit in good standing, they may be able to refinance their mortgage. A conventional refinance will usually require the homeowner to have 20% equity in the home. The bank will only refinance 80% of the appraised market value of the home which must be sufficient to pay off the existing loan. Those with good credit will have other options. For those with lower credit scores, an FHA program may fit with certain restrictions and requirements.

Renting Your Home
In many cases a home may be rented with positive cash flow which can be used to pay the mortgage. Sufficient research should be done to insure positive cash flow to include cost of living, cost of repairs and maintenance, cost of move-outs and vacancies, and the possibility of market decrease. Consult a qualified agent for help in determining whether or not your home will be a benefit as a rental property.

Selling Your Home
If you have sufficient equity in your home, you may list the property with a qualified agent who understands the foreclosure process. If the homeowner has other property, cash reserves, good income or certain investments, the bank will not consider them in a hardship situation. In this case, the bank will require the total amount of the loan to be paid. If hardship can be proven, other options are available.

Deed in Lieu of Foreclosure
This option is also known as a "friendly foreclosure". A deed in lieu allows the homeowner to return the property to the lender rather than go through the foreclosure process. Lender approval is required for this option, and the homeowner must vacate the property. This option is not available to those with more than one mortgage, but if there is equity in the home, it will be less expensive for the bank to accept the deed instead of going through the foreclosure process, creating a win-win situation.

Short Sale
If a homeowner owes more on their property than it is currently worth, they may work with a qualified real estate agent to negotiation a short sale with their lender. The property must be on the market and the homeowner must be able to prove financial hardship. Acceptable hardships include but are not limited to: mortgage payment increase, job loss, divorce, excessive debt, forced or unplanned relocation, and more. READ MORE

Bankruptcy
If the homeowner has non-mortgage debts that prevents them from paying their mortgage payments, a personal bankruptcy will eliminate these debts and may be a good solution.

Trustee Foreclosure
In an effort to mitigate their loss, the trustee may put the property up for auction. There are formal legal procedures that must be followed by the bank so it is not an instant situation. However, once the property is sold at auction, the homeowner will be evicted. This option has significant consequences including a huge credit score reduction and negative marks on your record for the next 10 years.

Servicemembers Civil Relief (military personnel only)
If a member of the military is experiencing financial distress due to deployment, and that person can show that their debt was entered into prior to deployment, they may qualify for relief under the Servicemembers Civil Relief Act.



Contact us today to find out which option will best help you in your situation.
We are here to assist you.

John Paden, REALTOR®
Cell: (757) 717-2267 • [email protected]

 

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