As the state’s foreclosure rate has remained stable, Idaho’s foreclosure rate has decreased slightly. In Idaho there were 569 seizures in April, 542 in May, and 501 in June 2007. Even with a slight reduction in the rate of seizures in Idaho, the number of seizures in the state remains high.
Foreclosures are the result of not making your monthly mortgage payments to your lender. The truth is, financial difficulties can happen to anyone, so knowing your options when it comes to foreclosure proceedings is knowledge everyone should consider.
Following are some typical situations of financial distress that lead to foreclosures.
- I have health problems and can’t afford my mortgage
- My real estate market has changed and now I can’t sell my house
- I experienced a death in my family and now I am unable to defend my home
- I lost my job and now can’t pay my bills
- My mortgage payments just increased and now they are too high
- I am going through a divorce and need to sell my house fast
- We just had a new baby and we can’t afford to look after our house
- Our medical bills are too high and we can’t sell our house
Here are some options for avoiding foreclosure:
Recovery Plan for Your Existing Mortgage:Your existing loan recovery pays only all your repayments including, monthly principal and interest payments, late fees, and attorney fees. If you can prove to your lender that you can pay back your payments in one lump sum then your lender will consider recovering your loan. Some possible sources of recovery money are immediate family members, relatives, retirement accounts, income tax returns and in some circumstances credit cards.
Payment Plan with Your Current Lender:If you are experiencing short-term difficulties or financial difficulties and over time are able to repay your mortgage, then your lender may consider you for a repayment plan. A payment plan is nothing more than making your existing mortgage payments plus a portion of your repayments each month. For this option, you should be able to pay 20-50% of your total payback up front. Then over the next 12-24 months you’ll need to pay your regular monthly mortgage, plus your remaining repayments. Consider this option if you can afford more than your monthly mortgage payment, can afford 20-50% of your repayments now, and your financial difficulties are short-term.
Loan Modification:Some lenders will allow you to restructure your loan to stop the foreclosure process. If you can afford your monthly mortgage payments but can’t afford your repayments, then restructuring your loan may be an option. A typical loan modification will add your repayments to the end of your existing loan principal. Loan modifications can change your current interest rate and extend your current loan term. Your monthly loan payments will change so you need to make sure you can afford the new monthly mortgage payments.
Refinancing Your Home:Depending on how long ago you bought your home and your local real estate market, you may have enough equity in your home to refinance. When refinancing your home consider it a long term solution to stop the foreclosure process. Get recommendations from loan brokers or loan officers from friends or relatives. Typical refinance fees are between 2-4% of the loan amount. Loan fees pay for things like appraisals, lender commissions, keeping paperwork, and pulling your credit report. Stay away from loans with prepayment penalties and adjustable mortgage rates.
Pre-Foreclosure Sale:A pre-foreclosure sale is simply selling your home before the lender takes your home back and sells it at a public auction. Each state has its own foreclosure laws and therefore each state has a different foreclosure timeline. In Idaho, after you’ve fallen behind on your monthly mortgage payment for 90 days, your lender makes it public. Most foreclosure notices are posted in your local business newspaper. In Idaho, lenders usually reclaim your home 4-6 months after the foreclosure notification. If you can sell your house fast before the lender takes your property then do it. To sell your home quickly, consider getting a free, confidential, no-obligation quote from a local real estate investor.
Short Sale:If you don’t have enough equity in your home to sell it, pay off your mortgage and cover the costs of selling, a short sale may be your solution. Short sales can be very time consuming and complicated but should be considered a viable foreclosure avoidance solution. Simply put, a short sale is negotiating with your lender to receive less than the amount owed on your mortgage. If you have a 1st and 2nd lien on your home, you have a much better chance of short selling with the 2nd lien holder. This is because if the property is repossessed by the lender, the lender first gets the property. The first lender will then sell your home at a public auction and any money left after the sale goes to the second lien holder. I wouldn’t suggest trying to complete the short sale on your own. Having a professional with experience in short selling by your side can make or break a short sale deal. There is a lot of detail and paperwork involved in a short sale. Having someone who knows the short sale process and paperwork is definitely necessary for success. One of the biggest factors in starting the short sale process is getting an offer from someone to buy your home. The lender will not begin processing your short sale documents until you have a signed purchase and sale agreement for your home. This is why I suggest contacting your local home buyer. Very few Realtors know the short sell process, or even what it is. Also listing your property and waiting for a quote eliminates the valuable time needed to complete the short sale process. Real estate investors don’t charge anything to buy your home, you sell your home to stop the foreclosure process, and the bank doesn’t have to do the entire foreclosure. Everyone wins in a successful short sale.
Deed of Confiscation Substitute:This is your last resort before foreclosure. To be considered in lieu of foreclosure, you can only have one mortgage on your property. Your lender usually asks you to try to sell your house recently and your house must be in good condition. Lenders won’t always accept property back and release you from your debt.
Unfortunately many of your choices will have long term consequences affecting your credit that you need to be aware of. Therefore I highly recommend talking to a real estate professional about your foreclosure situation.
Often the best foreclosure avoidance is selling your home quickly. You can quickly sell your home to a real estate investor to stop the foreclosure process. Here are some advantages of selling your home fast to a professional home buyer.
- They can repay your payment
- They can take over your loan
- They can buy your home quickly, on the date of your choice
- They can work with banks to complete short sales
- You can sell your house fast and rent it back from real estate investors