If you or anyone yo know has fallen behind on mortgage payments or is just struggling to keep up this web site has a lot of helpful information to help you find a good alternative to foreclosure. There are several alternatives to foreclosure. Although this site focuses primarily on short sales, a home owner facing possible foreclosure needs to know what options are available in order to determine if a short sale is the best option in their individual situation. As a Renton short sale I am happy to assist you in making the right choice to stop foreclosure. In many cases a short sale is the best option available but not always. Please consider the following foreclosure alternatives before making a final decision.
(1) Short Sale: Doing a sort sale allows a homeowner to sell their property for less than the mortgage balance that is owed to the mortgage lender. The lender writes off the difference between the sale price and the mortgage balance and the home owner avoids going through a foreclosure. For more information about the benefits of doing a short sale go to the Foreclosure VS Short Sale page.
(2) Reinstatement: Reinstatement is the simplest but also the most difficult solution for many people that need to to avoid foreclosure. The home owner pays the balance owed to the lender including interest and late fees and the foreclosure process is stopped. No approval from the lender is required for reinstatement.
(3) Forbearance or Repayment Plan: This option allows the home owner to catch up on the payments over a period of time. If a repayment plan is approved by the lender they usually give the home owner one year to get current. The amount in arrears including interest & penalties is divided into 12 payments. The home owner makes the regular mortgage payment plus the repayment until they are current.
(4) Mortgage Modification: A loan modification reduces the interest rate, the principle balance of a mortgage, the term of the loan or any combination these three. Lender approval is required for a mortgage modification. A mortgage modification will result in more affordable monthly payments.
(5) Rent the Property: If a home owner is not too far behind to get caught up on payments renting the property is a good option for some. This option is best considered when the rent is high enough to make the payments. It is also important to remember that the owner of the property is still responsible to cover any maintenance expenses that arise while the property is being rented. Home values have been going up. If the current trend continues many properties that are currently upside down will have equity.
(6) Deed-in-Lieu of Foreclosure: A deed-in-lieu allows the home owner to turn the keys in to the lender without going through the painful foreclosure process. Lender approval is required for this option the home owner must move out of the property. In most cases the damage to credit is less than a full blown foreclosure. Keep in mind the credit damage is still far greater than a short sale.
(7) Bankruptcy: Bankruptcy has been marketed as a solution to foreclosure but but this is only true is a few states. “Washington State not being one of them” It does not require lender approval but you must have non-mortgage debts to claim in the bankruptcy. In some cases a bankruptcy will slow down the foreclosure process but it will not stop the foreclosure altogether. Please consult with a qualified bankruptcy attorney if considering this option.
(8) Refinance: With today’s low interest rates, refinancing can lower the payments in some cases enough to allow a home owner to be able to afford to keep up the payments and stay in the home. If you have already been late or missed payments however your credit score could be damaged making this option impossible. Having enough equity in the home is another difficulty faced by many who try and refinance.
(9) Servicemembers Civil Relief Act: Military service members that are deployed and suffer a financial hardship due to deployment are eligible for the servicemembers civil relief act.
(10) Sell The Property: Homeowners with enough equity can list the property with a real estate broker that understands the foreclosure process and sell it before it is foreclosed. In today’s increasing real estate market more and more home owners are able to sell with equity. If the home owner is unable to keep up the payments during the marketing and sale of the property the equity could be slipping away as interest and penalties accumulate. If you have begun to fall behind or know that you will falling behind in the near future keep in mind that time is of the essence.