|
|
|
Oftentimes as a Top New Jersey Real Estate agent, I help homeowners like you understand and evaluate your next move when it comes to falling behind on mortgage payments. Rest assured that help is available and it comes in different forms.
I understand what you are going through. The market changed for me as well and even I have had to make some the same adjustments I recommend to clients. Here is a snap spot of the options that are available to you if you are in fact behind or delinquent your mortgage payments.
Each individual’s situation is different and one option may or may not meet your needs or help you in the end. To discuss your specific situation, please contact me immediately so that you can sleep easy knowing you are doing all that you can do to get through this difficult time.
Option 1: Inaction Leads to Foreclosure
Many homeowners like you may in fact do nothing when it comes to falling behind on mortgage payments. Part of doing nothing comes out of frustration from losing a job or divorce, sudden illness or death or even buyer’s remorse. In my opinion “inaction” is never an option, but the decision to overtly ignore your situation and do nothing is an commonplace among many people when they initially fall behind on their mortgage payments. Many homeowners do not know how to seek help. Ignoring your situation is the worse thing you can do for yourself, which will ultimately lead to foreclosure.
My suggestion is to be proactive and contact your lender immediately even before you fall behind. Or call an agent like me to discuss your alternatives.
Please note: I don't always advocate selling. In fact, one of my first questions when it comes to foreclosure alternatives is: Do you want to keep your home? If you say yes to question, I change gears and advise you on how to save your home.
Option 2: Refinance
Depending on when you purchased your home, your initial down payment or appreciation in your area, it is possible that you qualify to refinance or change the terms of your original loan. In fact, if you have been on time with your payments and your loan was FHA insured, you may qualify for an FHA Streamline REFI, which the term "streamline" refers only to the amount of documentation and underwriting that needs to be performed by the lender, and does not mean that there are no costs involved in the transaction. The goal of the REFI is to result lower your monthly principal and interest payments. Closing costs can be paid out of pocket or rolled into the loan for a higher interest rate.
Option 3: Loan Modification
If you are struggling to make your mortgage payments or can’t take advantage of lower interest rates because your home has dropped in value, you may be eligible for the Making Home Affordable Program, which is the first loan modification program offered by many lenders. If you do no qualify for Obama’s Marking Homes Affordable Plan, your lender may allow a temporary forbearance (period of time in which you do not have to make payments). Your lender may even help you devise a repayment schedule that will put you back on track. Loan modification can be negotiated by you and your lender. Oftentimes, principal is not forgiven and some loan modification programs have conditions such as increase rates, balloon payments or acceleration clauses that will need to be explained to you. That’s where I come in. I often read the proposals given to you by the bank to help you evaluate how you should proceed.
Option 4: Pre-foreclosure Sale
If you cannot afford your home over the long term, you may need to sell the home and move to housing that you can afford. While this means giving up your home, you may still be able to avoid foreclosure. If you cannot sell your home for the amount necessary to pay off the mortgage loan the loan servicing company may be willing to accept a payoff amount less than what you owe on the mortgage balance of which the difference i.e. the short may be handled in three different ways:
1. You may be expected to some to the settle table with the difference (not likely for many people).
2. You may be responsible for a portion of the difference at settlement or through interests free installment payment.
3. You will have the claim the difference as income for the year in which you short sold. **Please speak to a tax consultant to verify how this difference could affect you-I am not a tax professional, but can refer you to one if you are affiliated with anyone at this time.
Option 5: Deed in Lieu of Foreclosure (friendly foreclosure)
If you cannot sell your home in a reasonable amount of time, your mortgage company may allow you to voluntarily transfer the deed to the property to the mortgage company. In which case, the house is sold and the same there condition from option 4 may affect you.
Option 6: Deed-for-Lease Program (D4L)
D4L allows eligible borrowers facing foreclosure (or their tenants) to stay in their primary residences Under D4L, the borrower transfers ownership of the property to the lender through a deed-in-lieu of foreclosure and the borrower (or the tenant) signs a lease for up to 12 months. The program is designed for borrowers who don’t qualify for other workout solutions, including modifications, or who do not meet their obligations under the modification. The purpose of the program is to minimize displacement of families and deterioration of neighborhoods that often occurs when homes are left vacant. The rent may not exceed 31 percent of the family’s gross income. Fannie reserves the right to market the property during the lease term and may sell it to an investor subject to the lease.