7 Ways to avoid foreclosure

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      In today's marketplace, many different places lend money. Although you may not be able to refinance with your local bank due to your current situation, there are many mortgage companies and lenders who specialize in creative financing solutions which is how they can compete with such big banks. They can review your situation and help find a solution to your needs. 

     Yes, the loan you'll get will probably have a higher interest rate than a regular loan, but if you have a good amount of equity in your property, the ability to refinance may be a good option.

     You are probably thinking "If I could bring my mortgage current, I wouldn't be in this situation!" Sure, that may be true, but have you looked into every possible way that you may be able to get the funds?

     Are you able to borrow it from a friend, family member, or a co-worker? Are you able to sell something? Does your employer have any hardship loan programs? The more people you talk to and think about it with, the more likely it is that someone will come across a solution.

     The lender does not want to foreclose. That's because lenders are in the business of having their money at work in loans, and not sitting on a property they have taken back through foreclosure. Not only is that a black mark on the lending institutions, but it hurts their financial picture as well. 

     Therefore, in many instances, lenders are willing to do "workouts". What this means is that they are willing to work out the back payments that are owed, until you become current again. 

A typical workout would be the lender taking the full amount of your back payments and dividing that number by 12 or 24. They would then add that amount to your current payments until you are paid off.

     When considering a workout, you've got to be able to make that extra payment each month or you'll be right back where you started - in the foreclosure process for the second time. At that point, the bank will not look very favorably upon your situation. 

It's best to work with a workout specialist… someone who has done workouts before and knows all the "ins and outs" of the lending business. 

     Declaring bankruptcy is a viable option for being foreclosed upon, but it should be used only as a last resort. Also, use it only if you know that you will be able to keep up with the future loan payments. Otherwise, you're just postponing the inevitable, and the longer you wait, the less money you will walk away with from your property. 

     A bankruptcy will be reported on your credit report for seven years and will also be reported in the financial section of the newspaper - it's a requirement from the bankruptcy court.

     Declaring bankruptcy is also costly. When declaring bankruptcy you will have the option to declare either Chapter 7, 11, or 13 bankruptcy. These refer to the different parts of the bankruptcy law and relate to whether you are somewhat in debt and need to negotiate with lenders, or whether you truly are going to walk away from your debts. However, be cautious because you can only declare bankruptcy up to every eight years, certain future debts might not be eligible for even bankruptcy protection. 

     To create shared equity, you borrow the money from an investor, to make up your back payments. In return for bringing your loan current, you give the investor a certain portion of the equity in your property. You are giving up part ownership, in return for keeping your part ownership, which beats giving up the whole thing over to your lender.

     Out of the seven methods to avoid foreclosure, this is probably the most difficult to accomplish because they're aren't many investors who are willing to risk the money (the back payments) on an individual who has a history of not paying and becoming at risk of foreclosure.

     This is a form of property sale. It's called a "subject to" transaction. An investor offers to make up your back payments and take over your property, subject to the existing mortgage.

     The title of the property goes into the buyer's name, though the mortgage stays in your name until the loan is paid off. This could take as little as thirty days, or as long as three years. 

     You may ask "How would I know if the investor will make the payments?" The answer is simple: he has just made up all of your back payments; he now has a financial stake in the property. It only makes sense that he makes your payments to protect his investment. 

This type of sale is becoming quite common. The benefits to you:

• You don't have a foreclosure on your record.
• You may get some cash immediately to start fresh.
• You immediately solve your looming foreclosure.
• Your credit gets built back up through no effort of your own because the investor makes up your back payments and begins making your monthly mortgage payments on time every month. Before long, your credit score is once again in good standing. 

     Sometimes people just want to walk away from a bad situation and leave everything that reminds them of that situation behind. In this case, you sell your property outright, collect any equity that you have in the property and start over again. 

     One great thing about time is its ability to heal wounds. Yes, things may be bad now, but as Johnny Cash always said, "This too shall pass". It may be time to face what is happening and act in your best interest right now for a better tomorrow.  

     You can sell your property through a real estate agent or directly to an investor. Selling Directly to an investor will save you the commission that you would be paying a real estate agent and more importantly will save you time.

     Call us to discuss the possibility of buying your property and helping you walk away from the bad situation you are in.