Though you may never experience the financial difficulties that occur with the loss of a job, a family illness or poor financial choices, the unfortunate facts say someone will. Whether it is you, or some other someone, it is well advised that a home owner understand that communication with your financial institutions is the key to successful loss mitigation.
When you find yourself in a position of not being able to financially cope with a crises, don't ignore the letters you will be receiving from past due creditors. Whether it is an auto loan, credit card, or your home, most creditors offer financial incentives to prevent loss. Naturally, it is only to their benefit and yours.
Call or write your lenders loss mitigation department promptly. Explain situation, and what you are doing to attempt to address it. Seek guidance from multiple financial experts - not bankruptcy attorneys - on potential short and long term solutions. Be prepared to provide detailed financial information to include you all your debt balances, monthly payments, income and miscellaneous necessary expenses. Attempt to terminate luxuries such as piano lessons, league bowling, cable, Internet services, etc. Bring your expenses down to the bear necessities immediately upon the occurrence, or realization, of the negative financial situation.
Stay in your home. Do not let someone talk you into selling your home on a lease purchase or some other acquisition scheme. Don't sign any papers your don't understand, and beware of any contract of sale or loan assumptions where you are NOT released from liability of your mortgage. Remember, if you are not in your home, you may negate most of the financial relief available to you through you financial institution.
Contact a HUD-Approved counseling agency. These groups have been created and designed to facilitate home owners in seeking relief during times of financial crises. You can learn more at Hud.gov.
Where your home is concerned, conventional, VA and FHA Lenders have a range of financial options to assist you. While they are not uniform or universal, none wish to have you lose you home if at all possible. Immediate truthful communication with your mortgage company is critical to a successful resolution of the delinquency issues.
Alternative that may be available to you through you Lender:
Special Forbearance: Your lender may be able to assist in arranging a revised payment plan. Depending upon your financial situation, this plan can include a temporary payment reduction, suspension, or payment modification.
Mortgage Modification: Where the issue is excessive debt load, your lender may be able to refinance some or all of the existing debt responsible for creating the cash crises. Alternatively, the lender may be able to extend the terms of your mortgage loan, reducing the payment amount and create some relief to the financial hardship.
Partial Claim: A Lender, with an FHA Loan, may be able to work to obtain a one time payment from HUD to bring your mortgage current. This is a non-interest bearing second mortgage with no monthly payments. Repayment is made only after the 1st mortgage is paid in full.
Pre-Foreclosure Sale: You lender may allow you to sell the home for an amount less than the balance owed and forgive any deficiencies.
Deed-in-lieu of Foreclosure: As a last resort, you lender may be able to allow you to give the property back in exchange for releasing you from the mortgage obligation. While this does not save your home, it is much better on your credit than a foreclosure.
Each lender will determine what programs you qualify for based upon the type of loan you have. There may be alternatives beyond the examples listed that expand upon the type of help available to you. The key in this situation, is communication. If the lender feels you are working with them as a partner, they will be much more inclined to work with you towards a solution that benefits everyone. Ideally, for all lenders, is that you stay in the home.
DOWN PAYMENT SOLUTIONS™
Other Important Links for down payment assistance and first time home buyers:
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