You are hearing more and more about homes being foreclosed upon in record numbers.
In Danger of Being Foreclosed Upon?
Unfortunately, its not all just media sensationalism, too many homes are being foreclosed upon and too many homeowners just don’t know what to do, how to prevent it and what their alternatives to foreclosure might be, if any.
Well, this will provide some information that might help some people in that regard.
The most important thing to realize is that the risk of foreclosure is something that can be foreseen, often long before the homeowner starts missing payments on the mortgage. For whatever reason people start finding it hard to meet their monthly obligations. Sometimes, it is from spending too much on “wants” instead of needs. Sometimes it is from loss of job, sickness or other misfortune. They may be able to simply change their life/spending styles and make their payments. But often, especially for reasons of job loss, etc. they spend down their savings, start maxing credit cards out, use one card to pay another, borrow from friends and family, but still find themselves getting deeper into a hole.
And, once in that hole, they see no way out and often end up being foreclosed upon. Well, while this is not going to be an article that tells you how to get out of that hole, or to keep from getting into it, it will provide some ideas that may prevent a foreclosure. Some may not help you keep your home, most of them, in fact. But, they will keep a foreclosure off of your record and may allow you to purchase another home in the future in a shorter period of years than having a foreclosure on the record will.
Here are some options:
- Refinance: in some cases the homeowner might be able to refinance at a lower mortgage rate cutting $100′s off of their monthly payment. This can sometimes be done directly with the finance company or possible under the Making Home Affordable initiative. Information about Home Affordable Refinance can be found at http://www.MakingHomeAffordable.gov.
- Lender Workout: Sometimes you can work things out with your lender if you are having troubles. There are two ways this can work: Forbearance: when you have missed payments, have late fees, penalties, etc. the lender may work with you to schedule a fixed amount of payments to catch up rather than demanding them all at once. Loan Modification: this is similar to a refinance but often after missed payments. Sometimes the loan amount may be reduced, interest rates lowered (sometimes temporarily), length of term changed, etc. all to reduce the payment amount in order to get the loan paid off.
- Sell and Bring Cash to Closing: You may be able to sell your home and bring cash, if you have enough, to cover what might still be owed after selling for less than what you owe. The seller will be responsible for any fees and commissions. You should consult with your finance and tax professionals before doing this.
- Deed in Lieu of Foreclosure: in this case the homeowner offers the lender the property in exchange for the cancellation of the note on the loan. This will work most often in states that have a long foreclosure process. In Georgia, which can take as little as 30 days, this is often not a viable option. You might benefit by the assistance of an attorney if you elect to attempt this process
- Request a Short Sale: This is selling your home for less than what is owed before the home goes into foreclosure. The lender will have to agree to accept the price before you can complete the sale. It is more difficult if there are more than one mortgage on the property but can still be successfully completed. The homeowner should use the assistance of a knowledgeable real estate agent in this process. The different banks and other mortgage holders all have different criteria for initiating a short sale, but for each of them, the homeowner requesting the short sale will be required to submit the same type of paperwork justifying their request. There are some companies that will charge an upfront fee to help the homeowner with this process, whether successful or not. However, using the right real estate agent will get the homeowner this service with no out of pocket costs. In a short sale, as opposed to bringing cash to closing, any commissions would be covered by the lender.
In Georgia, once you receive Notice of Default, which is the first step in foreclosure, it is often too late to attempt any of these steps, however, working with an attorney or real estate agent. They may be successful in help the homeowner delay foreclosure.
However, it is best to start pursuing any of these alternatives with as much time in advance of foreclosure as possible. If you are having difficulties making payments and see yourself getting deeper and deeper into trouble, consult professional help. You may be tempted to try to sell your home one your own but remember, most FSBO homes end up selling through a real estate agent anyway. You run the best possibility of success by using an agent.
If you are “underwater”, you owe more than the home is worth, it is almost an imperative to use a knowledgeable agent to get the home sold with a “short sale” process. The agent will be working for you to get your home sold before foreclosure, often with a team that might include financing professionals and attorneys to help in the negotiation with the lender. And remember, the lender will cover those commissions and fees, not you.
If you would like more information on Short Sales, whether in Athens – Clarke County Ga, Oconee County, Oglethorpe County, Madison County or Jackson County, or for information about buying or selling property in and around Athens call me at 706-207-5290 or you can email me at mailto:athensrealestate@earthlink.net with any questions.
Mike Saunders
Keller Williams Realty Greater Athens
For information about buying or selling property in and around Athens call me at 706-207-5290 or you can click here to email me with any questions.
Find out more about what I can do for you or search for property at http://www.The Athens Real Estate Page.com.
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