We know you didn’t sign the real estate contract to purchase your house with the intention of defaulting on the loan. However, sometimes life throws us curves a little hard and fast, and circumstances pile up that may force you into this extremely difficult situation. If you find yourself in a position where continuing to pay your mortgage is becoming a problem, there are a number of things you can do to address the situation. - Stay in touch with your lender. The lender is actually an ally because they sincerely want you to keep paying your mortgage instead of defaulting into foreclosure.
- Talk to your lender about the possibility of setting up a repayment plan if you can resume full payment after you get through this “rough patch”.
- Determine if your lender will work with you to negotiate new terms on the loan such as lengthening the amortization schedule, lowering the interest rate, or even rolling any delinquent amount into the loan before re-amortizing the loan.
If none of these alternatives are feasible, you may decide to sell your house. There are two options for you in that case: a short sale or foreclosure. FORECLOSURE – A foreclosure, including a Deed-in-Lieu of Foreclosure, means that your lender will take over ownership of the home and sell it to recoup as much of the loan amount as possible. If you let your home go into foreclosure, your credit score will be reduced by approximately 250-280 points, and you may need to wait approximately 36 months before a lender will offer you a reasonable rate on a new mortgage. SHORT SALE – A short sale is usually much more attractive than foreclosure. In a short sale, your lender agrees to accept a sales price that is less than the amount you owe on the mortgage. Especially when the equity you have in your home is not sufficient to cover all the costs of selling, a short sale makes good sense. After a short sale, your credit score will be impacted, but only by approximately 80-100 points. And, 18 months is usually a sufficient amount of time to wait before applying for another mortgage. Letting your home drift into foreclosure isn’t the best alternative over the long-term. While the short sale process is complex and involves a number of parties, it may well be your best choice. We have the expertise to help you evaluate the options. If a short sale is the best option, we can guide you through the process. Make the best decision for you and your family – now and in the long run. Call us at 310-863-9979, or use the form below to send an email.
Nellie & Yanni |