Sarasota Mortgage Rates | The Mortgage Skinny

If you’re having a tough time making your monthly mortgage payments then read the rest of this article and maybe you will be able to figure out how to make ends meet.  There are 6 different decisions you can make in order to make ends meet.  Some of them may be very difficult to make but in order for you to make the right decision you need to have no emotion.  I know it’s extremely tough to have no emotion when you’re deciding if you should keep your home or not but having no emotion will be better for you in the long run.  Below are the 6 decisions you may need to make:

1. Re-negotiate your monthly payment with the bank.  I’ve heard a number of people have tried to do this and have not succeeded, but more recenently banks are starting to open their ears.  I just heard a story about a CPA who was working out new monthly payments with his clients mortgage companies and coming up with great results.  Supposedly he helped lower his clients interest rate down to 2% which allowed his clients to keep their home. 

2. Refinance your loan.  If you are in a situation where you have a high monthly mortgage payment due to a high interest rate and you have enough equity left in your home to refinance, then I highly suggest this.  This may not be a choice for some homeowners because they are in a situation where they owe more on the home than it’s worth.

3. Sell and Cut your Losses.  A great way to get rid of your monthly payment is to sell your home and cut your losses.  If you have money in the bank to pay for these losses then this is an option.  If your home is worth more than what you owe on the home, then this is a great option as well.  This isn’t a great option if you owe more on the home than what it’s worth and you don’t have any money in the bank to pay for your losses.

4. Short Sale.  Short selling your home in today’s market is the best way to cut your losses if you can’t do any of the above.  A Short Sale consists of presenting your bank with a contract that is below market price and asking if they would be willing to accept the contract and close out your lien without putting a deficiency lien against you for the difference.  With the way the market is going, banks are more likely to accept a short sale.  A number of banks are dealing with a lot of foreclosures which consists of a lot of fees for a bank, so doing a short sale cuts out a lot of these fees.  More than likely if they don’t accept a short sale it will result in foreclosure which is extremely costly.

5. Foreclose.  Foreclosing on a property is probably the worst thing you can do.  But if you have no other option, then foreclosing is definitely a way out.  If you read my previous article about foreclosing than you know exactly why you shouldn’t.  Your credit score will go down, it costs the bank a lot of money, and the bank has 4 years to put a deficiency lien against you which may cause you to be in the same position years down the road. 

6. Bankruptcy.  Bankruptcy is not a bad decision if you have no other way out and there is no light at the end of the tunnel.  Filing a Chapter 7 Bankruptcy will wipe away all your debts and is basically be the end of the story.  In today’s world it’s tougher to qualify for bankruptcy, you either need to have an income below the median income or you need to be qualified as insolvent.  Either way, once you have qualified your creditors can no longer contact you and your assets will be divided between the creditors.  The creditors can not put any lien against you and you are officially working with a clean slate.  Only problem with this is your credit score drops dramatically and you’ll have a tougher time qualifying for credit cards, auto loans, and mortgages.

None of these decisions are something you want to make.  But depending on your situation it may be something you have to make.  As I’ve said before, I don’t reccomend you making a decision this big without first consulting an attorney or CPA. Every situation is different so contact someone who can review yours and help you make the right decision.

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I’m sure a number of you maybe visiting this website because you were wondering about Foreclosures and what the consequences may be.  I’m not an expert in Foreclosures but I have some information about some of the problems you may run into if you decide to foreclose.  Before you decide anything, please consult a lawyer or someone who specializes in foreclosures.  It is too big of a decision to make just by reading some blogs or some articles posted by authors who don’t know your situation.

The number one disclaimer I’ve heard from consumers and realtors I’ve been working with is do not foreclose.  It may sound great that you’re going to be getting rid of your debt and wiping yourself clean of the monthly payments of that investment home or primary home you once loved.  But it could end up costing you more in the end.  Banks are in a tough market right now especially with a number of their customers in default and with a large number of properties currently in foreclosure.  They’re doing whatever they can to prevent a customer from foreclosing.  It costs a bank quite a bit of money to foreclose.  Think about it…. obviously a bank is getting the home back because the customer couldn’t sell it in today’s market and couldn’t rent it out for a profit.  The bank then has to auction the property off, and a lot of times they don’t get what the customer owed.  So they’re taking a loss for that, and then they have to pay for all the lawyer fees.  It’s just a miserable situation, and the number one cause for these large banks to shut their doors.

 So as a consumer what is the big deal with letting the bank take the fall?  The big deal is that the bank then has four years to come back and hit you with a lien.  So for the first year or two you may think you’re smooth sailing, but in reality you have an addition two years to worry if you’re going to get hit with a deficiency lien.  In the long run you may be in the same situation as you were before, so make sure you think long and hard.  Like I said before, consult a lawyer who specializes in foreclosures because not all situations are the same.

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Few things are as devastating as losing your home. Sadly, it’s not always inevitable. In many cases the foreclosure could’ve been avoided with some outside help.

You are in a unique position to advise your clients in financial matters. If you know that a client is on the path toward foreclosure, take the time to show them how it can be avoided. First, remind them of some of the hidden difficulties that will arise if foreclosure occurs.

Finding a new home. Don’t let your clients believe that it will be better to let the foreclosure happen, because after they lose their home, they will still need to find a new place to live. All too often, the price they will need to pay in rent will be almost as high if not higher than their current mortgage payment. Remember: The owner of the property needs to make his mortgage payment, too, so he’s going to charge a rental payment that’s higher than his mortgage costs.

Deficiency judgment. It’s not uncommon that the sale of the home is insufficient to cover the remainder of the mortgage. When the property has been damaged, or market values have dropped, the owner may end up with a bill in the tens of thousands for the difference.

Despite what many people think, most lending institutions are not anxious to foreclose. It’s a last-ditch effort to recover their money and minimize their losses, and it’s an incredible hassle. Most lenders would rather avoid it, if possible. There are multiple sources for help that your client should be aware of, and most lenders will be happy to hear that their clients are going to try to keep their home rather than just await a foreclosure.

Housing Counseling Agency. The US Department of Housing and Urban Development maintains a list of HUD-approved counseling agencies. Have your client call (800) 569-4287 to find the agency nearest them

FHA-Insurance fund. FHA borrowers may qualify to have HUD make a one-time payment to bring their mortgage current. See www.hud.gov/foreclosure for more information on the requirements to qualify.

Different mortgage program. Have them talk to a loan officer about the possibility of refinancing their mortgage to a more affordable program.

Special Forbearance. Many borrowers can qualify for a new payment structure if they’ve had an increase in their cost-of-living, such as unexpected medical expenses, or a decrease in wages. This payment structure will allow the owner to repay the lender in a given time frame.

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Hundreds of thousands of families all over the nation were foreclosed upon last year and this year looks just as grim. It’s sad and unfortunate that people financed and purchased homes they clearly could not afford.  I’m sure they were all hyped about the appreciation the country was seeing and thought it was a win-win situation. Maybe they were looking for a quick flip for some extra cash or were talked into a stated program, pay option arm, or even a no doc program. Who knew it was going to be so difficult to find a buyer or people would stretch themselves so thin that even finding a renter would not fit. Take a look at this article I found:

The number of housing foreclosures rose sharply across the country in 2006, reported Default Research (http://www.defaultresearch.com/), the rapidly growing real estate research company for foreclosure properties. The largest increase in foreclosure activity was in Nevada (up 166 percent); while the smallest increase was in Washington State (up only 18 percent).

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