As the foreclosure rate for the nation remains steady, Idaho foreclosure rate is slightly decreasing. In Idaho there were 569 foreclosures in April, 542 in May, and 501 in June of 2007. Even with the slight decrease in the foreclosure rate in Idaho, the number of foreclosures in the nation remains high.
Foreclosure is a result of not making your monthly mortgage payment to your lender. The truth is, financial difficulty can happen to anyone, so knowing your options when it comes to the foreclosure process is knowledge everyone should consider.
Here are some of the typical situations of financial difficulty that lead to foreclosure.
Here are a few options when it comes to foreclosure avoidance:
- I have health problems and can not afford my mortgage
- My real estate market has changed and now I can not sell my house
- I had a death in my family and now I can not afford to keep my house
- I lost my job and now can not pay my bills
- My mortgage payment just increased and now my payments are too high
- I am going through a divorce and need to sell my house fast
- We just had a new baby and we can not afford to keep our house
- Our medical bills are too high and we can not sell our house
Reinstatement Plan for your Existing Mortgage:Reinstatement of your existing loan is simply paying all of your back payments including, monthly principal and interest payments, late fees, and attorney fees. If you can prove to your lender that you are able to make up your back payments in one lump sum of money then your lender will consider reinstatement of your loan. Some possible sources of reinstatement money are from close family members, relatives, retirement accounts, income tax returns, and in some circumstances credit cards.
Repayment Plan with Your Existing Lender:If you encountered a short term hardship or financial difficulty and with time can repay your back mortgage then your lender may consider you for a repayment plan. A repayment plan is nothing more than making your existing mortgage payment plus some portion of your back payment every month. For this option you will need to be able to pay 20-50% of your total back payments up front. Then over the next 12-24 months you will need to pay your regular monthly mortgage, plus the remainder of your back payments. Consider this option if you can afford to pay more than your monthly mortgage payment, can pay 20-50% of your back payments now, and your financial hardship was short term.
Loan Modification:Some lenders will allow you to restructure your loan to stop the foreclosure process. If you can afford your monthly mortgage payment but can not afford to pay your back payments then restructuring your loan might be an option. A typical loan modification will add your back payments to the end of your existing loan principal. Loan modifications can change your current interest rate and extent your existing loan term. Your monthly loan payment will change so you will need to make sure you can afford the new monthly mortgage payment.
Refinance Your Home:Depending on how long ago you purchased your home and your local real estate market, you could possibly have enough equity in your home to refinance. When refinancing your home consider it a long term solution to stopping the foreclosure process. Get a loan broker or loan officer recommendation from a friend or relative. Typical refinance costs are between 2-4% of the loan amount. Loan fees pay for items like the appraisal, lender commissions, recording paperwork, and pulling your credit report. Stay away from loans with pre-payment penalties and adjustable rate mortgages.
Pre-Foreclosure Sale:A pre-foreclosure sale is simply selling your home before your lender takes your home back and sells it at public auction. Each state has its own foreclosure laws and therefore each state has a different foreclosure timeline. In Idaho, once you are 90-days delinquent on your monthly mortgage payment your lender makes it public knowledge. Most foreclosure notices are posted in your local business newspaper. In Idaho the lender typical reclaims your home 4-6-months after the foreclosure notice. If you can Sell your home fast before the lender takes your property then do it. To sell your home fast, consider getting a free, confidential, no-obligation offer from a local real estate investor.
Short Sale:If you do not have enough equity in your home to sell it, pay off your mortgages and cover the cost of selling, then a short sale might be your solution. A short sale can be very time consuming and complicated but should be considered a viable solution of foreclosure avoidance. Simply put, a short sale is negotiating with your lenders to accept less than what is owed on your mortgage. If you have a 1st and 2nd loan on your home, you have a much better chance of doing a short sale with the 2nd lien holder. This is because if the property does get taken back by the lender, the 1st lender gets the property. The 1st lender will then sell your home at public auction and what ever money is left over after the sale goes to the 2nd lien holder. I would not suggest trying to complete a short sale yourself. Having a professional who is experienced in short sales on your side can make or break the short sale deal. There are many details and paperwork involved in short sales. Having someone who knows the short sale process and paperwork is definitely required for success. One of the largest factors in starting the short sale process is having an offer from someone to purchase your home. Lenders will not start processing your short sale paperwork until you have a signed purchase and sales agreement for your home. This is the reason I would suggest contacting your local home buyer Very few Realtors know the process of a short sale, or even what it is. Also listing your property and waiting for an offer takes away the valuable time needed to complete the short sale process. Real estate investors charge you nothing to purchase your home, you sell your home to stop the foreclosure process, and the bank does not have to go through the entire foreclosure. Everyone wins in a successful short sale.
Deed-In-Lieu of Foreclosure:This is your last option before foreclosure. To be considered for a deed-in-lieu of foreclosure you can only have one mortgage on your property. Your lender typically requires you to have tried to sell your home recently and your home needs to be in good condition. Lenders will not always accept a property back and release you from your debt.
Unfortunately many of your options will have long term consequences affecting your credit that you need to be aware of. Therefore I highly recommend talking with a real estate professional about your foreclosure situation.
Many times the best foreclosure avoidance is to sell your home fast. You can sell your home fast to a real estate investor to stop the foreclosure process. Here are some of the benefits of selling your home fast to a professional home buyer.
- They can make up your back payments
- They can take over your loan
- They can purchase your home fast, on the date of your choice
- They can work with the bank to complete a short sale
- You can sell your home fast and rent it back from the real estate investor