What home-owners facing foreclosure do not realize is that they have legal, ethical, standard options to avoid foreclosure and still not spend money. Here are the best options for home-owners to avoid foreclosure:
- Try to sell your home.
- If you're home is still worth more than what you owe the bank, you can sell your home. You will have to price it so that it actually sells, but also try to avoid bringing any many to the table. If you're already behind on your mortgage payments, you will have to sell it for enough to cover those back payments and fees as well.
- For example, if you still owe $250,000 on the mortgage, but homes comparable to yours in your neighborhood are selling in the $270k's, even if you are a few months behind on your mortgage you can still cover the existing mortgage after the sale. Talk to a Realtor about your market, marketing, and options.
2. Try to short sell your home.
- If you're home is NOT worth more then your existing loan balance, the you may consider a short sale. A short sale is when a home-owner sells their home for less ("short") of what is owed on the mortgage, after the bank approves of that price. The bank would rather sell the home $30,000 less than the loan balance to avoid repossessing the home, which costs them major bucks. The problem with short sales is that they are very long processes dealing with the bank, and can take up to a year to close.
- This is actually the easiest and quickest way to get out of your house and avoid foreclosure on your credit. A buyer (usually an investor) will take over your mortgage payment, pay the back-payments that have not been paid to the lender, and be granted the deed of your home. You will not have to make any more mortgage payments, and will avoid foreclosure on your credit. This is done legally with the lender, county, a title insurance company, and the standard real estate contracts. Many home owners have done this and have benefited.
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