Posts Tagged ‘Mortgage loan’

Getting a mortgage before the door shuts

If you have been sitting on the fence trying to decide whether to buy a new house or refinance a mortgage, you should act soon.  New loans are starting to get costlier.

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Foreclosure Sales– What Every Homeowner Should Know

 Summary: There are several procedures to be followed before a bank can make a foreclosure sale due to non-repayment by a homeowner. At any stage of this process, the homeowner can repay the bank to get back his property. There are also other options to retain the property for which a homeowner can get advice from a debt counsellor.

A foreclosure sale takes place when a borrower is unable to make payments towards his mortgage as per the agreed schedule and the bank recovers the money owed to it by selling the property. When a mortgage is entered into, the title remains with the bank and does not get transferred to the home owner until the last scheduled payment towards the mortgage is made. However, there are certain procedures to be followed before the bank can sell the property and every home owner should be aware of their rights with regard to a foreclosure.

The exact procedure for a foreclosure sale may vary from one State to another; however before the bank can sell the property, there are certain procedures to be followed. As the first step in the process, the bank has to send a formal communication by certified mail to the borrower informing him about the default in payment. The letter usually outlines the period of time and the specific amount that the home owner has to pay the bank in order to avoid foreclosure.

If the homeowner is unable to pay the amount due to the bank within the period specified in the notice, then the bank can proceed with the foreclosure either through the judicial process or a non-judicial remedy depending on the laws of the State and the clauses in the mortgage deed. Under the judicial process, the bank will have to approach the court to get a clearance to sell the property. Once the bank gets the authorization to sell, then a formal notice regarding the sale is sent to the homeowner who has to vacate the property within a specified time.

The bank then puts up the property for auction or sale and the property is sold to the highest bidder if it is close to or higher than the expected price. In case the bids are not suitable, the bank may purchase the property with the intent to resell at a later date. A point that every homeowner should be aware of is that at any stage in the process before the final foreclosure, he can choose to repay the bank the amount due and take possession of the property. There are other options available to a homeowner such as negotiating with the bank to accept a lower payment, refinancing the mortgage, selling the home, making a short sale or modifying the loan. For help in finding out the best option, contact me!

Written by Carol Pefley

www.carolpefley.com

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What You Need to Know About Foreclosure

 

 

Summary – Foreclosure is the option available to lenders in case of payment defaults. They could assume ownership or sell a property to reclaim their amount. The homeowner can try for forbearance, loan modification or short sale to prevent foreclosing.

Foreclosure is the method by which lenders, who have been facing default payments for some time (two to three months) and are convinced that the borrower will not be able to pay back the loan, recover their capital. They either assume the property’s ownership or try to sell it off. Lenders typically file for foreclosure after they have contacted you both by means of a demand letter and over phone (typically a month after your payment date). They file for the papers with whichever authority is in charge. The foreclosing sale itself may happen three to four months after that.  

After the notice is recorded, an ad needs to be published for five to six weeks in a newspaper and a notice needs to be sent to the homeowner. Three to four weeks prior to the sale, the authority would also send a notice to the homeowner mentioning the sale and methods by which you can prevent the process. But, you do not have to wait till this particular notice arrives to do something about foreclosure. If you know that you will have to start defaulting or are already facing late payments you should start thinking about how to avoid losing the house to foreclosing.

Your best way to avoid foreclosure would be approaching the lender. You could ask the lender to offer forbearance or loan modification. Forbearance would mean that the lender allows you to go without paying for a few months in return for higher payments afterwards, till you catch up with the payment. It comes in handy if your lean period (when you cannot pay your mortgage) is going to last only for a few months and you could make higher payments without fail after that.

Loan modification involves modifying the terms of the loan such as loan term, mortgage payments, at times even capital. Since foreclosure is not a pleasurable experience for the lender either, it is very probable that you will get some modification (do not seek the help of people claiming to be lone modifiers unless they are registered and licensed. Do not make any upfront payments). You and your lender could also try and get a payment from the FHA Insurance Fund to make up for lost payments (Partial Claim). Do either only if you are able to meet the payments after that.

If you have equity on your home, you could also try selling it. If you do not have equity then this may not be an option. Do not list with a realtor if your property could get tied up. You also have the option of voluntarily giving back the property to the lender (Voluntarily Foreclosure) or getting somebody else to assume the loan in return for the property (only possible for loans made before 1988) or file for Chapter 13 bankruptcy (may be costly; you would have to make higher payments after that or you will lose your property again (Chapter 7 bankruptcy- It looks even worse on your credit report too). Finally, you also have the option of a short sale (only if the lenders agree to the reduced money that they will receive). The house is sold for an amount less than the loan amount and the proceeds are given to the lender.

Knowing these details about foreclosure will help you decide on how to proceed if you are facing payment defaults. Do not be an ostrich. Do something.

Written by Carol Pefley

www.carolpefley.com

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Foreclosure Sale – How You Can Benefit From It

 A foreclosure sale occurs when a person who takes out mortgage against a property is unable to make his payments as per the schedule and the bank or the lender moves the court to sell the property in order to recover the amount that they are owed. When a mortgage is taken, there is a formal agreement between the buyer and the lender, whereby the lender retains a right over the title of the property until the time that the buyer makes all the payments towards the loan.

 A foreclosure sale benefits the mortgage lender, as it enables him to put the property on the market and utilize the sale proceeds towards recovering the amount due to him. In addition, a foreclosure sale can be beneficial to a prospective buyer who is looking to buy a property. How does it benefit a prospective buyer?

 For a first time owner who is on a budget, his dream home can get bigger if he is able to get it at a cheaper price during a foreclosure sale. Although banks try to make a profit out of foreclosure sales, in times when the real estate prices are in a slump, they may not be able to get the market rate and will be willing to sell it for the best offer. By looking out for properties that are being sold due to foreclosure, a buyer can get a bigger house than he normally would with his budget.

 A foreclosure sale can also benefit an investor who is looking at making gains through investing in real estate. By buying the property at a price lower than market rate, he could hold on to the property until the market picks up, so he can make a profit. Alternatively, he could spend a small amount towards refurbishing or remodeling and then resell at a higher price thereby gaining a significant profit.

 However, before you buy a property during a foreclosure sale, you should make sure that you understand what you are getting into. Evaluate the risks before taking the plunge. In some cases the house would not be open for viewing prior to the auction. Hence, you will not be able to assess the condition of the property and may have to spend a large amount additionally towards repairs. Make sure that you evaluate or get an expert to help before deciding to buy.

Written by Carol Pefley

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Getting Loan Modifications without Getting Cheated

Loan modifications are almost the last options for people who risk losing their home to foreclosures. In case you are wondering, it means modifying your loan so that you could manage to pay it back. It could be a change in the term, a reduction in the mortgage payments, at times even a reduction in the amount to be paid. The lenders agree to it because foreclosures are losing terms for them as well. At times, it is better for the lender to modify the loan than to go for foreclosures. Unfortunately though, there are many unsavory elements that take advantage of the desperation that a homeowner who risks foreclosure feels and try to rip them off by promising loan modification. You have to keep a wary eye out for such people.

Here are some tips that would help you get loan modification without getting cheated in the process –

  1. Call the Lender Yourself – It is not necessary that you should get an outsider to get your loan modifications done. You could try the direct approach. Many lenders have loan modification departments, so call them and ask them to guide you to the concerned department. If they say they don’t have them then ask them to guide you to loan mitigation department. And don’t be disheartened if they at first say no. Persist.

 

  1. Threaten Bankruptcy or Foreclosure – Since lenders dislike foreclosure very much you could threaten them with that to get them to agree to modifying your loan. Say the process will drag on for a long time if they do not agree to do something. And if you threaten bankruptcy it would be worse for them.
  2. Get Help from Licensed Folks – If you cannot get the loan modifications on your own get help from licensed people who specialize in it. Do not go for people without any license or reputation. Do not be taken in by ads.

 

  1. Do Not Pay Any Money Upfront – If any loan modification company asks for upfront fees then they are most certainly trying to cheat you. Hence do not pay any fees in advance.

 

  1. Ask for More Be Ready to Settle for Less – You should naturally ask for the most you could get by means of loan modifications. But this does not mean the lender will give you whatever you ask for. So be ready to settle for anything that you can manage and would improve your situation. Getting a professional appraisal done would also help your cause.

 

Loan modifications, if done properly can save your home and can save the lender all the bother of a foreclosure.

Written by Carol Pefley

www.carolpefley.com

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