When we buy a home, we have every intention of paying it off and living there (or renting it out). Unfortunately, unforeseen circumstances can throw a wrench in our plans and put us in the uncomfortable position of facing foreclosure. If you’re faced with hardship and making your mortgage payments becomes a struggle, it’s important that you stay connected with your lender. They don’t want you to default and fall into foreclosure; believe it or not they are on your side and will try to find ways to work with you. Consider a repayment plan if you will be able to pick up your full payments in a reasonable amount of time (a time that you will be able to get back on track that’s also workable to your lender). Another alternative is to see if you can come to new loan terms with your lender; this could be an increase in the length of the loan, forgiveness of a missed payment or two, negotiation of a frozen or lower interest rate, or a re-amortized loan that has the past-due amount incorporated into it before it is re-amortized. You never know what options may be available to you if you don’t ask and negotiate. Should worse come worse and none of these options fit your circumstances, you can let your home go into foreclosure or you can sell your house via a short sale.
What’s a foreclosure and what does it mean for you? A Foreclosure means that your ownership and rights will be legally terminated and be transferred to the lender. The lender will then attempt to collect as much of the loan as possible by selling the property. What this means for you is that you will likely have to wait approximately 3 years to be offered a reasonable rate on a new mortgage and your credit score will drop somewhere between 250-280 points.
What’s a short sale and what does it mean for you? A Short Sale is more beneficial to you in that the lender accepts sale of the property for less than what is owed on the mortgage. A short sale is particularly beneficial when you do not have enough equity in your home to cover the costs of the sale. While your credit score is also affected in a short sale, it only drops approximately 80-100 points vs. 250-280 with a foreclosure. Rather than wait 3 years, as with a foreclosure, a year and a half is generally long enough to obtain a reasonable mortgage rate after a short sale.
A short sale is a bit more complicated than a foreclosure but it’s generally the better option and will usually allow you to be in a better position in half the time than just letting your home be foreclosed on. As experts in short sales, we can help you determine your choices and decide what’s best for you. If a short sale best for you, we will help you every step of the way. Contact me today at 608-770-4568, or use the form below to send an email, and I'll help you start relieving the pressure and support you through the process. Pete |