12 Options That Every Mansfield Area Homeowner Has When Facing Foreclosure
- Re-instatement – You can catch up on all your back payments on your mortgage right up to the day that the court forecloses your property. To qualify, your payment should include all back payments as well as any late fees and court costs you’ve accrued.
- Forbearance or Re-payment Plan - Talk with your bank to negotiate a repayment plan to help you catch up on late payments, as well as any late fees or court costs you’ve accrued. This options allows you to pay back your lender in smaller payments over time versus all in one day.
- Refinance – If your credit still is in fairly good condition and current rates are lower than your current mortgage, you can refinance your home loan. This will not only help you lower your interest rate but it will also help you lower your monthly payment as well.
- Rent – To help get caught up on your mortgage, you may consider renting your home to someone else. Talk with a Mansfield area REALTOR to see what similar homes in your area are currently renting for.
- Sell – If you still have equity in your Connecticut property, then it’s better to sell your home versus losing it to foreclosure. After all, a foreclosure not only damages your credit but it can also threaten your financial future. Talk with a Mansfield area real estate expert for help on determining the fair market value of your home.
- Mortgage Modification - Banks want to avoid foreclosures just as much as homeowners. That’s because banks must take on property taxes, insurance, utilities and yard/house maintenance when they foreclose on a property. That burden stays with them for as long as it takes them to sell the property. Thus, many banks now offer mortgage modifications to existing home owners. These modifications result in a reduced monthly payment, making it easer for you as a home owner to keep your property.
- Short Refinance – This relatively new process involves refinancing the home after reducing the principal balance. Also known as the Government’s HOPE Program, a short refinance usually entails a lower interest rate as well.
- Bankruptcy – This requires that Mansfield area home owners hire an attorney in order to file chapters 7, 11 or 13. By filing any one of these chapters, you’re taking your debt to the courts to have all or part of it dismissed. Although this will delay the foreclosure process, it’s likely that you’ll still have to deal with a foreclosure down the road. At that point, you’ll have a bankruptcy and a foreclosure on your credit report.
- Service Members Civil Relief Act (SCRA) – First signed into law in December 2003, this law offers protections to military personnel. Look up Public Law 108-189 for more information.
- Deed in Lieu of Foreclosure: In order to prevent a bank from foreclosing on their homes, some homeowners will voluntarily give the deed back to the mortgage company. Although this will give you the same negative impact as a foreclosure would, the bank must waive their rights to a deficiency judgment in this case. Still, it’s important to note that you will still be subject to taxation in this option.
- Short Sale – When you sell your property for less than what is owed on it, you’re short selling your home. This option has become increasingly popular for home owners who wish to avoid foreclosure. And although short sales admittedly take a lot of time and patience, they are ultimately a win-win for both home owners and lenders.
- NEW as of January 1, 2015: GREAT NEWS! Foreclosure by Market Sale must be offered to you by your lender if you are in default and before a foreclosure proceeding. Contact us today for assistance. We will work with you and your lender to get your property into the MLS and sold quickly and help you with finding other housing.
Complete a Short Sale as a Connecticut Home Owner and Enjoy the Benefits
As mentioned before, short sales really are a win-win for both home owners and lenders.
For the home owners, it means that your credit report will not show a foreclosure. Instead, it will show that you had late payments and satisfied debts. While this will still pull down your credit score, it won’t be pulled down nearly as much as it would have been with a foreclosure.
For instance, short sales typically affect about 50 basis points for two years. Meanwhile, foreclosures typically affect about 300 basis points.
What’s more, a foreclosure remains on your credit report for 10 years.
For lenders, a short sale means that they don’t have to spend the time and money it takes to complete a foreclosure. It also means they don’t have to look after yet another foreclosed home while they try to find a buyer.
Thus, short sales are much more preferable to foreclosures for all parties involved.