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| So you’re facing a foreclosure and it’s too late for a refinance or a mortgage loan modification; what will you do? In that particular situation, you’re options are down to three. Your options are to sell your home, deed-in-lieu and short sale.
What is a short sale?
Let’s trace the root of the problem. You are in this mess because you missed out on a few payments. Because of that, you have incurred late payment fees and other kinds of fines. Your debt ballooned because of that and it has reached the point where your loan is greater than the market value of your home. If you do opt to sell your house, you may still owe your creditor the difference of the actual value of your loan and the selling price of your home.
The good news is that if the remaining amount is not that large, your bank might agree to waive it or reduce it to an amount that you can easily pay. Knowing that your lender sees everything as a business transaction, they may not be all the time understanding and most of the time, they will refuse to do what you want. But a little negotiation will never hurt.
Banks prefer short sales rather than foreclosures because then they don’t have to do the auctioning themselves. They receive the payment straight from the homeowners. What happens in a simple foreclosure is that the property becomes a responsibility of the bank. The house will be put in a public auction but it may not be purchased for a long while. While it is in the ownership of the bank, the bank has to pay the property taxes, and maintain it. So they actually have to spend more.
A short sale could also be beneficial to the borrower as well. Yes, a short sale will appear on your credit report for seven years but if before the sale, your credit was clean; you can still apply for loans and mortgages. Some banks will be willing to overlook that when you apply. However, nothing is more devastating than a foreclosure, but in extreme cases keeping your home may no longer be an option. At least in a short sale, there is a silver lining.
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| The very reason why homeowners would, as much as possible, want to keep their home and ward off any possibility of a foreclosure is because they want to protect the equities which they have built up through the years. Purchasing a home is an investment in itself and any appreciation in the property’s market value can be an asset to the homeowner. This is something which they find just as hard to let go of next to the house itself.
There are a myriad of options open to those who need help for foreclosures. A handful of homeowners though would rather opt for a home loan refinance.
What is a loan refinance?
A loan refinance is paying off your existing loan by getting a new loan. Your house will still be tied to the new loan though. The loan wherein you were able to buy your home is called the purchase-money loan. The process of getting the new loan is just the same as getting your first loan only that you already have the property to begin with. But lenders will always see business in whatever transaction they make and will assess if you are a safe bet.
Your wanting to have a loan refinanced will always tickle the curiosity of your lender and expect that you will be ask why you need it. Now is not the time to make up stories. You must be completely honest and set the record straight. Lenders who know their borrowers and situation well will be able to work out appropriate solution packages for them.
Like any other applicants, you will undergo a credit check so that the lender could evaluate the risks involved with granting your loan. Your credit rating will be heavily scrutinized. Any loan defaults and payment delinquencies will be taken into consideration. You may also have to give them a list of your accounts and how much money those accounts have.
Your lender will gauge your capacity to pay by examining your income and expenditures. This will give them an estimate as to your capacity to pay off the loan that you want. Lenders have different standards but if you have lesser than a 36% debt to income ratio, you can be hopeful about your loan being approved. A few lenders may tolerate a higher debt to income ratio but you must have a good credit rating or make a larger down payment to make up for it.
Be sure that you look over these essential pieces of information first before you go and speak with your lender. Check your records for any kind of inconsistencies and make sure you hammer these things out before asking for that loan.
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Brusce W. Williams the CEO and Chairman of the HomeStreet Bank voiced out support for the "Making Home Affordable" plan, expanding the the refinance opportunities for homeowners having trouble with their mortgages and the enabling servicers to modify loan mortgages under President Obama Administration's "Homeowner Affordability and Stability Plan". This Government Stop Foreclosure Plan which has two parts, that includes the "Home Affordable Refinance Program" and "Home Affordable Modification Program", is intended to render aid to as many as 7 to 9 million homeowners. According to Williams, the "Making Home Affordable" program is a positive step that provides relief to responsible homeowners and also help in avoiding foreclosures." The CEO said that they would support the Government Stop Foreclosure program which is focusing on affordability and its attempts to give strength to the communities by expanding the said programs and providing much-needed resources. With this, it would so make the mortgages more affordable for homeowners these programs have been developed to serve. Williams also said that they take an important step to sustaining long-term mortgages for homeowners. - Tags:countrywide loss mitigation, countrywide loss mitigation department, government stop foreclosure, help for foreclosures, home foreclosing, house foreclosing, judgement foreclosure, loan loss mitigation, loan modification ca, loss mitigation bank, loss mitigation countrywide, mortgage rescue bill
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