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Real Estate Options

Evaluating your options

7 Options for Struggling Homeowners

Often times when unexpected hardships hit or the market makes a dramatic turn, homeowners can fall behind on their payments.

Below are 7 options for struggling homeowners:

1. Loan Workout: The property owner can Re-Negotiate with the Current Lender, this will buy the Homeowner time to make the payments or sell the home.

2. Refinance the Loan: This is a great for those who have equity in the property and can qualify for a loan. Unfortunately it is impossible to get a loan on an “upside down” property.

3. Loan Modification: This is a great option to lower a mortgage payment for those who qualify. This can be done through the loss mitigation department at the bank. It is important to remember that this does not lower the principle balance on the loan.

4. Forbearance Agreement: This option simply takes the back due payments and fees and adds them to the principle balance on the loan.

5. Deed in Lieu: A deed in lieu of Foreclosure is an option for anyone that does NOT want to stay in the property. The Homeowner will hand over their deed to the lender to avoid the foreclosure. It is also sometimes referred to as a “cash for keys” program.

6. Short Sale: Allows the owner to sell at less than the property is worth. This is the best option for anyone that needs to sell their over leveraged asset. This is a WIN-WIN for both the lender and the homeowner. The lender does not have to incur the hefty foreclosure costs and the homeowner can get out from under the property without a foreclosure on their credit.

For more info, take a look at this other post we did on: “What is a Short Sale?

7. Foreclosure: Foreclosure is the last option and generally the worst for everyone involved. If the homeowner did nothing the property would simply make its way to the Auction block. The foreclosure is one of the worst marks on a borrower’s credit history. This will most defiantly affect their ability to purchase another property in the near future as it stays on credit reports for seven years on average.


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