Understanding Loan Modification

Being a home owner is a dream for many people. Unfortunately, there may be times of hardship throughout your lifetime. Maybe you lost employment or simply have more expenses to cover. If you find yourself struggling with your mortgage payment, a loan modification might be a great option to avoid losing your home. Following, details what a loan modification is and the average timeline.

What is a Loan Modification

The purpose of a loan modification is to decrease your mortgage payments to an amount you are capable of paying. There are several different ways a modification can occur. The following options will be based on a 30 year, 150,000 loan at 6% with a monthly payment of $899.33.

·       Extended Payment Terms: In this scenario, you will not experience a change in interest or principal. You simply extend the total time of the loan. Changing your loan from 30 years to 40 years will decrease your monthly payment to $825.32.   

·       Interest Rate Reduction: A common loan modification is decreasing the interest rate for a certain amount of time. This is a great option for a temporary situation. This scenario, can decrease your interest rate from 6% to 4.5%. Your monthly payment would drop to $760.03. However, if you need a permanent interest rate reduction, you more than likely will need to refinance. 

·       Reduce Amount of Principal: This option is one of the less successful ones. Basically, your lender reduces the amount of principal owed. You are not expected to repay the amount deducted.

How Long Does a Loan Modification Take?

The amount of time it takes to complete a loan modification varies with every situation. According to loansafe.org, the entire process can take 2 months to 2 years. It is hard to calculate an exact number. This is why you should be aware of all options available for your situation.

A loan modification is a good option in many scenarios. The success rate is unique to every situation. Many factors are considered, so you should always consult with a real estate professional.

Should I Sell My House to Avoid Foreclosure?

Although few home owners think about the potential of foreclosure when signing the paperwork for their mortgage, it is a reality that many must face when money becomes tight. In many instances, selling your home to avoid foreclosure can be an excellent strategy, especially since the alternative, which is typically bankruptcy, can leave your credit rating damaged for years.

Consider Alternative Options

In most situations, the only way to generally avoid foreclosure if missing payments has become imminent is a short sale. Short sales often end with you losing a significant portion of the money you have invested into the mortgage, as the only way to attract a buyer in such a short period of time is to list the property well under the current market value for similar homes in the area. Some alternatives to this option include negotiating a lower monthly mortgage payment with your lender or a period where it is acceptable for no payments to be made, as long as the amount owed is added on to future payments. Another option is to find a renter who will either agree to rent the entire home or sublease while you are still living there.

List the Home if its Value is Higher than the Amount you Owe

A short sale is a tactic which is typically utilized if the value of the home is lower than the amount currently owed. However, if the value of the home is higher than the amount you owe, it makes more financial sense to put it on the market for full price and take your chances with finding a buyer. According to SFGate, "List the house on the market immediately if the value of the house is equal to or greater than the balance of your mortgage. If the value of the house is considerably lower than the amount you owe, you should speak to your lender about a short sale."

Investors Who Buy Homes Can Take Your Problem Off Of Your Hands

If you own a home that has a lot of problems, you might be ready to get rid of it as soon as possible. Maintaining a home can be expensive enough already, and it can really become a drain if the home has a lot of issues.

There is no reason to keep putting yourself through all of the stress and financial hardship of owning a home that's in poor condition when there are investors who buy homes just like yours for cash.

Putting a home that has a lot of problems on the market can be challenging. You might have to wait a long time to find someone who is interested in buying it. In the meantime, you'll have to pay the taxes and otherwise deal with the problems associated with the house. Plus, you might not end up getting a lot for it anyway, which can make it all seem as if it isn't worthwhile.

By selling your home to an investor, you can get money right away for the home. Then, you won't have to worry about the house anymore, and you won't have to spend months or years trying to find a buyer. You'll have a big problem off of your hands in no time, and you'll be able to take the money to invest in a better house. It really is a win-win situation.

If you're looking to get rid of your problem home, contact us at We Buy Your Austin Home. If you have a home in the Austin area that you want to get rid of, we can help you.

Strategies to Help Stop Foreclosure

Many people will do anything to avoid the foreclosure of a home they have been living in for a large portion of their lifetime. While avoiding foreclosure can be challenging, it is possible if the proper financial options are utilized. By learning how to stop foreclosure, keeping the house of your dreams should be achievable.

Take Advantage of Available Government Loan Support

For those who decided to take out an adjustable rate mortgage on their home, it may be impossible to afford monthly payments when the interest rate goes up due to market forces. Thankfully, government programs exist to help ease the stress that this can cause on the average homeowner. According to Street Directory, "The government provides FHA-insured refinancing loans to qualified homeowners who may be facing foreclosure due to adjustable-rate mortgages or interest-only mortgages that are set to reset. This program is available to anyone who has a non-FHA insured loan, regardless of their payment history. You also have the ability to roll your first and second mortgage into a single FHASecure loan."

Set up An Agreement with the Lender

Most lenders are flexible when it comes to setting up agreements that prevent foreclosure from occurring. Lenders tend to lose a lot of money in the foreclosure process, so they are typically willing to work with a homeowner in order to prevent it from occurring. Options include a forbearance agreement that freezes payments until your finances are back in order, a repayment plan that allows for missed payments to be paid back over time or a partial claim where the lender loans you the necessary money to make payments interest free.

Leveraging a Home to Get You Through a Bankruptcy

Going through a bankruptcy is hardly easy for anyone. However, if you own a home, you have a few more options than most people. Here are some of the financial strategies that you can use if you own a home to see you through a bankruptcy.

Home Equity Line of Credit

If your credit history is good, you may ask a financial institution to give you a line of credit based on the equity that you have in your home. This line of credit pays back creditors and stay current on debts that would otherwise put you into bankruptcy. If you are already in the bankruptcy proceedings, a judge may offer a lifeline if your home assesses at a high enough value.

Debt Consolidation

Based on the equity in your home, you have options for debt consolidation. Consolidating a debt means finding an outside third-party creditor. This creditor will aggregate all of your debts into a single bill. It is possible to reduce the overall principle on the amount of money owed during a debt consolidation. The equity in your home buffers payments against this newly consolidated debt.

Home Rental

Renting out a home to renters gives you an additional stream of income that creditors may accept as a line of payment. The ongoing nature of rental income staves off bankruptcy while giving you a lifeline to find other sources of income to pay back your creditors. Check the market rates for rentals in your area to see how much your home is worth.

Regardless of your situation, income, or equity, if you would like to discuss all of your options for selling your home quickly to avoid foreclosure, contact us online.

Is Inheriting a House a Financial Drain?

So great-aunt Gertrude passed away, and you've received a letter form her attorney saying congratulations, you're inheriting a house. While this windfall might convince you that you were Aunty Gert's favorite, you'll probably rethink that after you've gone through the headaches and hassles of inheriting real estate. 

Maybe Gerty thought you were a dot.com zillionaire and wouldn't mind paying the estate taxes and the balance due on her reverse mortgage, but the reality is that most people don't consider the negative ramifications of a gift of real property and the burdens that they're placing on the giftee. As the heir, you are responsible for the finances associated with the property beyond the taxes and mortgage--the real estate taxes, homeowners insurance and association fees, and the general upkeep--utilities and maintenance. 

If you get lucky and find out the house is in a popular area and is in good repair, you should consider converting it to a rental property. You can manage the rental yourself if you've got the time and are handy with minor repairs, or you can hire a property management firm to oversee the entire operation for a percentage of the rent.

You could always move into the house and take over the mortgage payments, but that doesn't work if you've already got a house you love and a mortgage of your own. Disloyal as it may seem, selling the house is usually the practical path for a surprised heir, especially if you also inherit a house payment and an inheritance tax. 

If you need advice on how to manage the sale of inherited real estate, contact us and we can help you decide what's right for you. 

Things You Must do After Inheriting a House

Many people think that inheriting a home is something that is akin to winning the lottery-that is, until they learn what headaches are associated with it. If you’ve recently inherited property, here are some things you must add to your to-do list to ensure the process goes smoothly.

Review Property Records

The first thing you should do is determine whether or not a mortgage or reverse mortgage exists on the home. Even if the home had been paid for for quite some time, your loved one may have needed some additional cash and taken out a reverse mortgage or home equity line of credit. That person may have been embarrassed to tell anyone about financial struggles he or she was having, and elected to keep it a secret.

Surprise mortgages aren’t all you need to worry about. You should also check the courthouse for liens against the property. It’s also a good idea to ensure the property taxes are up to date. Many relatives are caught off guard to find the property they have inherited does not have a free and clear title. If this is the case, it’s better to discover this before the estate is settled.

Inspection

Older adults often put off home repairs because they can no longer do them themselves, and feel uncomfortable asking others to fix things for them. As such, you may be surprised to discover that there are a lot of little things wrong with the home that must be addressed before someone could live in it.

Another thing seniors tend to avoid is making upgrades. If your relative lived in the home for some time, chances are the plumbing, wiring, and HVAC system may be inadequate. Having an inspection performed will let you know if these systems need updating.

Inheriting a house may seem like a dream come true; however, it can easily turn into a nightmare if there are underlying issues that must be taken care of first. In many cases, selling the property quickly could be in your best interest, in which case we invite you to contact us today to find out more.

How to Avoid Foreclosure

Unfortunately, each year millions of homeowners lose their homes to foreclosure because they fail to make their mortgage payments. The good news is that this does not have to occur if you take the needed steps entailed in preventing foreclosure. If you’re worried about having to forfeit your home to foreclosure, here are some ways to avoid this problem.

Consult with Your Lender

Don’t ignore the situation. Contact your lender immediately after realizing you’re may be at risk for foreclosure because you’ve missed a payment. Most lenders don’t want to go through the process of foreclosure as it can cost them considerable time and money.

Stress to your lender that the problem is not permanent, but only temporary. For example, maybe you can’t pay your bills because of unforeseen medical expenses or you’ve lost your job. Most likely, your lender will grant you a reprieve until you get back on your feet. Sometimes, lenders ask for a lump sum payment. If you’re really fortunate, your lender may actually freeze monthly payments. 

File for Bankruptcy

After filing for bankruptcy, what’s known as an “automatic stay” goes into effect straight away. This stops a lender from foreclosing on a home or trying to collect debts. In other words, the foreclosure is halted during the bankruptcy process.

Filing for a Chapter 13 bankruptcy can help in keeping your home as it restructures your debts. This type of bankruptcy allows you to make partial or full repayments of your debts. Therefore, foreclosure may be avoided and you get to stay in your home. This is because you can make your delinquent mortgage payments using a Chapter 13 bankruptcy.

Filing for a Chapter 7 bankruptcy isn’t recommended once you’ve already entered the foreclosure process. But it can delay the proceedings, giving you additional time to live in your home without having to make payments.

Hire a Housing Counselor

You may want to hire a housing counselor who can help you straighten out your finances. What’s more, a good housing counselor can help you devise a workable compromise with your lender to prevent foreclosure.

Just be cautious of any counselor promising to either pause or stop the process of foreclosure. On the other hand, consider that some housing counselors can be expensive. To be safe, find your housing counselor from the website of the Department of Housing and Urban Development.

Considerations and Warnings

• ·       Locate your loan documents to know what will occur from failing to make mortgage payments. Be sure to thoroughly read and understand all terms of the document. If you need help, get counsel from a reliable realtor or attorney.
• ·       Be familiar with your state’s foreclosure laws, as well as the time frames involved.
• ·       Don’t be a victim of foreclosure scams. You should never feel forced into signing documents that says a firm will act in your behalf. If you do, you may be signing over your property title. As a result, you could become a renter in your own house.                                                          

You may need to sell your home. That’s when you need to call the professionals at We Buy Your Austin Home. We will buy your home, at cash, regardless of its condition, situation or equity. Please contact us.