Short Sale Alternates for Homes worth Less than the Mortgage
If you are running from financial crises and unable to pay your mortgage, you may opt for short sale. Short sale is considered a better alternate to foreclosure and bankruptcy. There are a number of homeowners which don’t want to go for short sale. But, what if you don’t want to proceed with the short sale or this option don’t work for you?
Short Sale Alternates
There are a number of alternates which can be adopted instead of a short sale. Some of the possible alternates are given here:
Try To Continue Payments:
Loosening home is not affordable option for everyone. When you bought your home, you managed to pay the mortgage payments. Try to continue making payments if you could do this reducing other expenses. Sometimes, the homeowners just try to dump the home instead they would be able to make payments reducing other expense. It is simply a matter of attitude and willingness to pay.
Refinance your mortgage:
Refinance your home mortgage with government refinance programs. Some refinance home programs like HARP allow you to refinance the entire mortgage. Some other programs may allow for a refinance up to a certain level and percentage. Keep in mind that lowering your mortgage payments are extending the period of payment.
Loan modification can work for you if you are facing financial complications, but you have to find the loan modification consultants that can help you get the job done. You need to be very careful while choosing a loan modification company and consultant. It is better if you talk to your bank about available options.
You can talk to your bank for note modification. This seems like loan modification, but it is different. You are negotiation with your bank to modify the term of your loan. Perhaps the bank would be willing to lower the interest rate on your loan, without a refinance and retain all the other terms, without submitting piles of paperwork. It’s a simple solution.
Buy New Home:
Buying a new home and renting existing one is also an option available to you. This is different from “Buy and Bail”. Some lucky homeowners may qualify for second home loan at the same time. Typically, the bank need reserves up to six months payments for each home. If you can make the exiting home cash flow from a rental standpoint, all the better.
Buy and Bail:
Although this is not an option, it is an available option that sellers choose. It doesn’t mean that if your bank can prove a Buy and Bail intent that the FBI might not be able to build a case for mortgage fraud. Some homeowners buy another home with the intention of renting out the existing home and then discover they cannot sustain the rental. Maybe the tenants stop paying or they can’t rent the home and continue to make payments on a vacant house, which ultimately drains all of their financial resources.
Selling the home with owner financing is also one of the options available to you. You might ask who would overpay for a home by buying an underwater home. Some of such kinds of transactions bet on the future value and that can lead to overpay as well. You need to make arrangements for upfront so you have a little security that owners will continue to pay. Get legal advice if you go this route because most existing mortgages contain an alienation clause.
Pay The Bank For Short Sale:
Pay the bank for a short sale. With the exception of SB458 in California, home lenders who might oppose to a traditional short sale will accept a short sale in which the sellers contribute to the bank. Some banks may opt for accepting 10 cents on the dollar or less. It is called a strategic short sale and includes any financial hardship.
Walk Away From Home:
This does not mean that you simply walk away from your home just packing your bags in the middle of night. It means stop paying the mortgage. Let the home go into foreclosure and ask the bank for cash for keys, without saving it. For some sellers without recourse loans, walking away might not carry any liability except for the social and financial stigma of foreclosure.