foreclosures Archives - Page 9 of 9

Working with Your Mortgage Lender to Avoid Foreclosure

: Image by respres via Flickr

Foreclosure continues to be a problem for many. If you are in danger of foreclosure, and you want to avoid it, you will have to work with your mortgage lender. There are some measures that a mortgage lender might be willing to agree to, if it means the whole foreclosure thing can be avoided. As soon as you realize that you might be in trouble, you should contact your mortgage lender. Here are the 3 most likely scenarios for avoiding foreclosure:

1. Repayment plan. This is when you work out the repayment of missed mortgage payments by dividing up the amount you owe, and spreading it out over a certain period of time. For example, if you owe $6,000, you migh be able to add $100 to each of your monthly payments for five years.

2. Loan modification. This is becoming a greater possibility since the passage of measures to encourage mortgage lenders to help. The government is offering incentives to lenders who are willing to lower interest rates, or change the term of the loan, so that you can more easily afford the payments.

3. Refinancing. If you still have equity in your home, you might be able to refinance. In this case your loan balance would be paid off with the new loan. If you have missed some payments, what you owe could be added to the loan balance.

Other methods that some mortgage lenders might consider (but not very likely) to help you avoid foreclosure include debt forgiveness for what you owe, forebearance and a short sale of your home.

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Buying a Bank Owned Home

by Miranda Marquit 3 Comments

Many homebuyers are considering the purchase of foreclosures. Many of these homes are bank owned properties or what is known as real estate owned (REO). These properties can be a very good deal, but there are also pitfalls to purchasing a bank owned home. One of the best things you can do, insists Real Estate Pro Articles, is to get a good buyer’s agent to help represent you:

As a buyer of a bank owned home, you are going to receive very little information about the home you are purchasing. It will be your responsibility to learn everything about the home through your buyer’s agent. It is inherently important that you choose to work with a buyer’s agent that understands the process of working with a bank. It would be a risky decision to purchase a bank owned home without a knowledgeable local buyer’s agent.

You should also be aware that when you purchase a bank owned home, most of the legal stuff is going to favor the bank. The bank will be able to back out at any time, and you will have to agree not to sue the bank in the future. Additionally, the process can take quite a long time — two months is average. You will be responsible for inspecting the property and looking for any other problems.

Buying a foreclosure can result in a good deal. However, in many cases the home in question is damaged or has some other problem. It will be up to you to make sure that you fix up the home and get everything in order.

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Home Prices Continue to Decline

by Miranda Marquit Leave a Comment

: Image by Getty Images via Daylife

According to the National Association of Realtors, the median home price of a house bought in Quarter 1 of 2009 is $169,000. This represents a 13.8% decline from the same period last year. It appears as though people buying homes are buying them for much cheaper.

Not that this is a real surprise.

After all, many first time homebuyers are finding all sorts of incentives to buy — and buy now. These types of buyers generally buy starter homes that are lower in price. Another factor, according to the NAR, is that there are a number of inexpensive homes that represent foreclosures and homes that are almost in foreclosure. In those cases, it is possible to get a home for less, since the seller (whether it is a bank or a distressed homeowner) is motivated.

This information reinforces the idea that now is a good time to purchase a home. Prices are low, and with government incentives and low mortgage interest rates, these buying conditions are practically once in a lifetime — or at least once in 30 years.

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Banks See Increase in Demand for Traditional Mortgages

by Miranda Marquit 4 Comments

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Hopeful glimmers of economic recovery are being seen (from pending home sales improvements to a rallying stock market) right now, and it is no surprise that many are starting to look for home loans again. Demand for traditional mortgages is up, probably due to a combination of low mortgage rates, low home prices and government incentives. And, while traditional mortgages are in high demand, it is interesting to note than other types of mortgages are not, reports MarketWatch:

For the first time in five years, banks reported higher demand for prime residential mortgages. But demand fell on net for all other types of loans — commercial and industrial loans, commercial real estate loans, nontraditional residential mortgage and consumer loans.

Clearly, for the time being at least, people have learned a lesson about “creative” financing and subprime loans. It is apparent that home buyers are more interested in making sure they can truly afford their homes long term, rather than trying to “upgrade” through the financing techniques that got us in this mess.

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Selling Your Home in This Market: Short Sale

by Miranda Marquit 3 Comments

There are a number of ways to avoid foreclosure. With the President’s mortgage modification program, many people may find that they can stay in their homes. But what happens if you need to sell your home? The situation changes, and you may have difficulty in this market. And what happens if you can’t get an offer on your home that covers what you owe on your mortgage? This is a problem for many whose homes have dropped dramatically in value.

Short sale

One option is engagin in a short sale. A short sale is an arrangement in which your mortgage lender agrees to take less for your home than you owe. The amount of the difference is forgiven, and the mortgage lender is just glad you tried to sell rather than simply walk away and leave the home to the bank as a foreclosure.

However, many mortgage lenders won’t consider a short sale unless you have the home on the market for at least 90 days. Others won’t think about it unless you are in mortgage payment trouble. You should also realize that a short sale can damage your credit rating. In this economy, though, many lenders understand that you might have had no choice and will take that into consideration when you go to buy a new home — provided your credit history and debt to income ratio are generally excellent.

A short sale can be a way of selling your home quickly in this difficult real estate market. However, if you don’t have to move and you can make your mortgage payments, you might be better off to wait until home values start growing again.

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Foreclosures Up for Quarter 1

by Miranda Marquit Leave a Comment

: Image by respres via Flickr

The number of homes threatened with foreclosure has risen for Quarter 1 of 2009. Part of the problem likely stems from the fact that many of the 90-day foreclosure moratoriums enacted by mortgage lenders over the holidays have run their course. Additionally, the recently mounting unemployment rate (although that seems to stabilizing now) has contributed to more homeowners becoming unable to make their payments.

While this might be discouraging, there is hope that President Obama’s recently announced mortgage modification program may help matters improve. If homeowners can modify their mortgages so that they are affordable, it is likely that the wave of foreclosures can be stemmed. However, it will take the cooperation of mortgage lenders in order to realize these changes.

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4 Tips for Buying a Foreclosure

by Miranda Marquit 4 Comments

Right now, many homebuyers are interested in purchasing a foreclosure. Even though homes not in foreclosure are experiencing low prices, it is possible to get an even better value when buying a foreclosure. This is because the bank, quite frankly, doesn’t want to own the home. There are many real estate resources out there that include helpful information on foreclosure listings. And here are 4 tips to keep in mind when buying a foreclosure:

1. Do your research on home values and the locality. Make sure you understand what non-foreclosure homes are going for in an area, as well as what foreclosures are going for. It is important to consider such items as location, resale potential and whether the home is near amenities (schools, shopping, entertainment) that you find desirable and/or necessary. Don’t just buy a foreclosure because it’s a “bargain”. Make sure it really is a good value for you.

2. Get your financing ahead of time. This is good advice in any homebuying situation. Shop around and get some ballpark quotes from mortgage lenders, and then get preapproved for home loan. Be up front, however. Some mortgage lenders have different requirements when you are buying a foreclosure. Make sure you understand what, exactly, is expected of the home.

3. Have an inspection. Many foreclosures are being vandalized by the outgoing occupants of the home. While this rage may be somewhat understandable, it is important to realize that in some cases extensive damage can effectively counterbalance your great deal. Major repairs to a foreclosure can result in you paying a great deal to bring the home up to scratch. An inspection will ensure that the home lacks serious structural and other problems.

4. Stay away from foreclosure auctions. While it may seem like a good idea, buying a foreclosure at auction is rarely a good choice. Damage is usually unrepaired, you don’t have an inspection, and any back taxes are transferred to the new owner (you). Additionally, you usually have to get together the cash to buy homes at auction. Instead, let the bank do the work for you: If a home fails to sell at auction, the lender takes care of everything and puts it on the market — priced to sell.

A foreclosure can be a great option when it comes right down to it. However, you need to be careful when you go about buying a foreclosure. You want to make sure you are truly getting a good deal, and that you actually are getting the best bang for your buck.

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