For many property owners with a mortgage in negative equity, letting the home fall into foreclosure may seem like their only choice. But if you’re struggling to keep up with mortgage payments on a home that is worth less than what you owe, it’s important to know that you do have other options. Here are just a few ways to avoid a drawn out foreclosure process.
Refinance – Homeowners current on payments may be eligible for assistance through the government’s Making Home Affordable program, which allows qualified borrowers to refinance their loan.
Loan Modification – Though refinancing may be the best option, it is unlikely. The most common way homeowner’s avoid foreclosure is by renegotiating their loan terms to achieve a lower monthly payment.
Short Sale – In a short sale, your lender agrees to allow you to sell the property for less than the mortgage debt, though you may still be liable for the difference.
Deed-in-Lieu – A deed-in-lieu allows you to convey all interest in the property back to your lender, satisfying the loan and keeping you out of court. As with a short sale, your lender may still hold you liable for any deficiency left on the mortgage.
Most homeowners’ initial instinct is to fulfill their obligation and continue to pay the mortgage. But this isn’t always very fruitful. It could be many years before you break even and begin to build positive equity again. In this scenario it is best to part ways with the bad investment. Finding a viable alternative to what will inevitably end in foreclosure will save you a lot of grief and cause the least amount of damage to your credit.
Whatever your choice, it requires careful consideration. If you are thinking about walking away from your underwater mortgage, consult with a qualified Foreclosure Attorney to discuss the particulars of your case and explore your options in greater detail. An experienced attorney can negotiate the best terms for the resolution of your mortgage and ensure that your interests are well represented.
Stephen K. Hachey, a Florida real estate attorney can help your wade through this process and determine a positive solution. Contact him at 813-549-0096.
The opinions in this post are solely those of the author. The author takes full responsibility for the content. Like all blog posts, this is offered for general information purposes and does not constitute legal advice.
This post was written by Stephen Hachey. Follow Stephen on Google, Facebook, Twitter & Linkedin.