Option # 1 – Refinancing to Avoiding Foreclosure
One other note to speak about before I get into each of the seven basic options, and that is what I would almost always say is NOT an option in a distressed situation. That is agreeing to a contract with an investor, who is saying they will “save” you from a foreclosure. There are a lot of different scenarios in which this plays out, and virtually all of them puts the homeowner in extreme jeopardy. DO speak to a real estate professional BEFORE you take any action with an investor or a so called “save your home” specialist.
Ok. Option # 1 Refinancing. This is not a viable option for the vast majority of distressed properties across the country. The reason it is not a viable option is that the majority of homeowners who find themselves facing a foreclosure are “upside down” or “underwater” on their mortgage. Meaning, they owe more on the mortgage than the home is worth.
It is impossible for a lender to refinance a home and extend capital on a loan if the collateral, the home, isn’t worth the amount of the loan. If a homeowner put a lot of money down when they purchased the home, or they purchased the home prior to the late 1990′s, and now are experiencing difficulty paying the mortgage, then a refinance may be an option. This does happen sometimes due to job loss, costly medical situations, and other unexpected scenarios. A refinance, if possible is a good option.
But again, for the vast majority of homeowners in a distressed situation in the Fredericksburg real estate market, this is not a viable option. In the next article we will be discussing selling and bringing money to closing. That will be a short and sweet article, before moving into the more detailed options.
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