How to Weather The Foreclosure Storm...Topic: Mortgage
During the housing boom over the last few years, have created an amazing opportunity for sellers as it wasn't uncommon especially in the south Florida market to see a house appreciate 50,000-100,000 in as little as one year versus normally appreciation rate of about 5% per year. This housing boom was also fueled by the availability of easy credit, from no documentation loans (based solely on ones credit score) to no trade line loans. This caused an unprecedented demand for housing and these programs made it very attractive for first time home buyers which bought homes through a 100-125% financing loan programs. Not many were prepared for the market turn and as a result, numerous amounts of home owners are left owing more than their house is worth otherwise known as being upside down.
Because of these relax guidelines these loan programs became very attractive to homeowners to refinance, which most of them did to consolidate some debt,which raised their loan amounts and hence found themselves in a similar situation of being upside down and cannot sell which left them with very few options.
However, in these types of situations it is important to work with a qualified mortgage expert to get some sound advice. My recommendation is if a homeowner finds themselves in either of these situation with not being able to qualify for a loan because of low credit scores or insufficient equity is to contact you lender and explain you situation as they have options such as a loan modification which can actually lower the home owners payments and this is also available to home owners that may have fell behind on a few payments because of a rate adjustment to their mortgage, some lenders will even take the amount owed and add it to the back end of the loan and start the client current for the following month just go give them a fresh start and some breathing room.
If you decide to sell and you are upside down, then the lender has an option known as a short sell, this simply is asking the lender to reduce what is owed to the current market value as to make the sale. One should be aware that as attractive as this option is as it could help you avoid foreclosure, it does come with some tax liability, if this property is not one's primary residence. The amount reduced will be considered forgiven debt and will be taxed as income to the homeowner. Please consult your tax advisor if you want to proceed with a short sale.
About the Author
Marlon Baugh is a nationally-known mortgage expert. Since 2003, he has specialized in mortgage loans for people with Bankruptcies, Foreclosure or with other credit issues, as well as Commercial Mortgages. If you would like a Free Copy or to get instant access to the remainder of this Insider Mortgage Report, please visit http://www.specializedfinancialsolutions.com/foreclosure.htm or Call 954-678-5796