Which step are you working on?
While the overall economy is showing faint signs of recovery, thousands of people in the greater Seattle area are struggling to make their mortgage payments.
If you’re underwater on your home, or having trouble keeping up with your monthly mortgage payments, you may be justifiably fearful that your mortgage provider is going to foreclose, even in spite of the current foreclosure moratorium.
Thankfully, there are a number of things that you can do to avoid foreclosure in Seattle. It’s important to remember that moving quickly is absolutely paramount, and could save your credit rating and your home.
So lets dive in to the 10 steps homeowners are using to avoid foreclosure in Seattle.
- Loan Modification: A loan modification simply means to change or modify the terms of your original loan. There are several types of loan modifications that may be available to you depending on the type of loan you have (Conventional, FHA, VA, etc.), and who is holding your loan. In some cases this can mean having the payment reduced and/or having some or all of the delinquent payments added on to the end of your loan. Loan modifications are not automatic, so you will have to qualify to receive one.
- Loan Forbearance: Forbearance is when your mortgage servicer, that’s the company that sends your mortgage statement and manages your loan, or lender allows you to pause or reduce your payments for a limited period of time. Forbearance does not erase what you owe. You’ll have to repay any missed or reduced payments in the future. So, if you’re able to keep up with your payments, keep making them. The types of forbearance available vary by loan type. Find more info here.
- Refinance your Mortgage: You may be able to contact your bank and arrange for them to refinance to a lower interest rate than your original mortgage carried, resulting in lowering the overall monthly payment. However, the farther behind your payments are, the smaller the loan-to-value amount of the new loan will be. If you are more than 90 days behind on your monthly payments, you may only qualify for a 55% to 60% of the loan-to-value. Do you understand what that means? If you have a $400,000 house, you will be able to borrow only $220,000 to $240,000.
- Chapter 13 Bankruptcy: First of all you need to contact a bankruptcy attorney. We are not attorneys and cannot give you legal advice. Since Chapter 13 bankruptcy involves the reorganization of debt, it can stop foreclosure in its tracks, giving additional time to pursue another strategy, such as a short sale process (see below).
- Short Sale: Briefly, a “short sale®” is negotiating with the mortgage holder (bank) to accept less than what is owed as payment in full. A short sale is a strategy used when distressed homeowners owe the bank close to or more than what the property is worth. To work best, a specialist short sale administrator and a realtor will need to be involved. The process of negotiating with the lender, and subsequently putting the property up for sale, can take many months. It can, however, be a solution that can end up with a good outcome for the homeowner/seller.
- Equity Partnering with a reputable real estate cash buyer: This option could be a good one for some homeowners. This keeps the owner in the deal until the house is rehabbed (if needed) and is sold to a buyer. With this option, you the homeowner and the cash buyer go into an Equity Partnering Agreement. After all expenses are paid Equity Sharing is paid from the profit. With this option, there must be sufficient equity and the seller will need to move out of the home. All rehabbing or fix up will be paid by the cash buyer. It can be a good way to hold on to some of your equity and preserve your credit worthiness. If you owe more than the property is worth, this option will not work.
- Subject to: This is another option can get you out from under your mortgage obligations quickly, without ruining your credit rating. You will be able to move on with your life. You, the seller, work with a reputable real estate cash buyer. The cash buyer agrees to bring all arrearages current, and to keep them current for the duration of the agreement, which is typically 3-5 years in length. At the outset, you, the seller, convey the property to the cash buyer. If there is enough equity and value in the property, you can walk away with cash in hand to start over again.
- Try and sell your home with a real estate agent. You will need to disclose to your realtor that you are behind on your payments or have entered into the foreclosure process. It generally takes 1-2 months to complete a real estate sale. You may have to drop the price well below market value to get a faster sale so that you can beat the foreclosure deadline. If you have plenty of time and plenty of equity in the home, listing with a realtor may be the best option. If you are too close to the foreclosure date, this won’t be an option at all. Are you in this category? If so, contact JR Berger Properties right away, and we can help you with your realtor, or else arrange for a fast cash purchase.
- Deed in Lieu of Foreclosure: This is the act of signing over your home and giving up ownership; deeding it back to the bank. This is usually not a good option. You are likely to have a foreclosure placed on your credit profile, and you may end up liable for any amount that the bank can’t recover against the amount due on your mortgage. You may find the IRS wanting to collect taxes on the amount you still owe the bank. In their mind it qualifies as income to you–the bank’s loss must be seen as your gain.
- Do Nothing and Lose your House: This is the easiest non-option, and it is what some people choose. You can wait out the moratorium process and the eviction process in the courts, which can take months. Contact an attorney who can tell you how to work the system to your advantage, and to hopefully minimize the personal and financial liability you will incurr. Hopefully you can save money so that you have some to move on.
We understand that the possibility of losing your home can be stressful. You aren’t alone. Citizens all over Seattle are going through the same troubles. Foreclosure can have a lasting effect on your financial life, and it’s important to move quickly and take advantage of any options available. You could save both your credit rating and remain in your home.
JR Berger Properties is a trustworthy cash home buyer in Seattle. Our interest is in buying properties we can beautify and improve to sell or rent out. As such, we may be able to help you avoid foreclosure… connect with us today and lets discuss your situation. We don’t charge any fees… we’ll evaluate your situation… and present you your options so you can move forward and get this foreclosure behind you.
CALL US TODAY at 425-200-9596 or fill out the form below!