Can’t Pay Your Mortgage? There are options (part 2)…

Posted on: May 30th, 2013

Part 2
Those who are sick and out of work will often find themselves behind on their mortgage payments before long.  In the last issue I collaborated with Rich Bradford of Re/Max Connection Turnersville and presented several options.   Two additional alternatives are short sale and foreclosure. 
1. Short sale.  If you owe more on your mortgage than your home is worth, you may want to consider a short sale.  A short sale involves putting your home on the market, finding a potential buyer that is willing to pay market value for your home.  The offer which is less than you owe is then presented to the bank with a lot of other financial information that you will be required to provide.  The bank will review the information and make a decision on the information provided.  Sometimes the bank will even offer you an incentive to move.  Some people have received over $30,000 to do a short sale.  It all depends on your lender and the program they are offering at the time.  This is not guaranteed, but realize there are options available.  You will have to prove hardship.  With a short sale option, the bank will, in a lot of cases, accept this as payment in full for your loan.  Your credit will not be tarnished as badly as it would with foreclosure.  A short sale will not appear on your credit report, but the late payments will.  A short sale is not as detrimental to future employment as a foreclosure.  In any short sale, you don’t have to vacate the home until closing.  If you have an FHA mortgage and want to do short sale, you may want to consider not moving out of the property as this may negatively affect your ability to do a short sale.
2. Foreclosure. If you get a foreclosure letter, don’t panic.  Call and find out where you stand and seek advice from a real estate professional or an attorney.  Foreclosure is a five-step process.  If you have to move, you will get notice from the sheriff.   Walking away from your mortgage is a big decision.  If you are behind on your mortgage and are currently in the foreclosure process, there may still be options for you.  Foreclosure by the sheriff’s office may leave you with personality liability to the lender and your municipality.  There may be serious repercussions on your credit report when you are involved in a foreclosure.  At the current time, banks are favoring short sales rather than foreclosures.  The banks don’t want to take possession of your home unless you leave them no options.  What you have to realize is that you have a lot of options.  Don’t panic and get sound legal and real estate advice.
You can make your life a lot easier by making right choices.  Facing the facts and not ignoring them will help you in the end. It’s not easy, but getting the right advice can guide you through the storms and make a bad situation better.
Beware:  This is a simplified overview of the options.  There are numerous guidelines for each.  Make sure you are making the best decision that suits your situation by consulting with an accountant and a Certified Distressed Property Expert or Certified Residential Specialist.  Rich Bradford has earned both of these certifications.  Call Rich for a free consultation:  (856) 228-7990 x 323 or 609-204-0774.

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