People facing notice of default mortgage payment on their house are undoubtedly going through the most dreaded phase of their lives. People are bound to make wrong decisions in distressed conditions.
Real estate expert Jeff Adams advises that with patience, one will be able to think clearly and make wise decisions.
The first thing when the lis pendens or Notice of Default is received is not to panic. It happens with many people. When the buyer’s market is on boom, then people buy two or more houses or other properties thinking it will yield profits and fill up their pockets. But while walking on the road of money building they are so busy looking at the summit, they forget to watch out for the pitfalls. And the result is usually is a Notice of Default.
Beware of the Real Estate Market Whirlpool
When property demand increases more than supply, a void is created. Hence, the rates of properties will shoot up. And when the supply is increased more than demand, then due to shortage of buyers, the rates will go down again. People caught in one of those whirlpools, would have ended up taking wrong decisions.
When you buy many properties with intention to renting them or selling for profit, then you will have to pay its mortgages too and the rate of interest will increase and adjust to the increased property rates. If market goes low before you can find a potential buyer or tenant, then you may face difficulty in paying down payments of all those properties. And you may ultimately end up facing a foreclosure.
Pre-Foreclosure – Can You Save your Home From Foreclosure Now?
If you are not able to pay the mortgages back to the lender, he will issue a notice of default which means you have got few days to pay back the mortgage and protect your house from foreclosure. The stage wherein your house is facing lis pendens and less time is remaining for your house to slip from your hands and be sold at an auction is called the pre-foreclosure stage. This is the time when you can work out some financing plan and save your house.
If you can arrange for the finance from somewhere, it will be like a blessing. But if you would have been able to do that why would you not pay in the first place? The problem lies there. Your salary is not sufficient enough to pay all the mortgages plus your house taxes like electricity bill, phone bills, gas bills and the list goes on.
The ideal procedure is to go for a short sale of your house. In short sale you will have to sell your house to a third party at a considerably lower price than the market value because money is the need of the hour. With that narrow margin, you can pay the remaining mortgages to the lender, find a new home (obviously cheaper than the previous one) and protect your credibility from sinking low due to foreclosure
Facts to Take Care Of During this Process
Save your home from foreclosure by discussing with your lender and work out a lower level finance option where you can ask your lender to lower mortgage payments or refinance to a fixed rate loan.
If you are considering the short sale option, be prepared for a down to earth bargain and yes, the amount of mortgage that the lender has agreed to forgive in the new workout plan is taxable. The lender has to show it to the Internal Revenue Service.
It is in the best interest of home owner as well as lender to agree for a short sale because if foreclosure comes upon, the lender will have to satisfy himself with lower price than actual market value of the property. Also the record of the house will always say it in black and white.
Moreover the foreclosure is very stressful and the whole process incurs lots of legal procedure fees. It is better to reach out on an agreement of short sale. After all, “it is better to have some money than not at all.”
Once you have convinced your lender to agree to a short sale, you will require an expert agent to carry out the procedures. Fish out for potential buyers and search for the ones you can fight a bargain with. Work around the finance plans. You can also directly hand over the reigns to the lender. Try to convince the buyer for a reasonable bargain if he takes up your last mortgages as his/her responsibility. This way, he will be directly responsible to pay it up to the lender.
These are the ways Jeff Adams suggest you to save your home from a stressful foreclosure and maintain your credit rating intact.
