I can not sell my house: Should I let it go to foreclosure?
Becoming a tenant may not seem like the worst idea when mortgage problems are experienced. The constant collection calls and financial stress can promote your fantasies to stop being a homeowner. However, let the house go to foreclosure is not always the best solution. Even if your house does not sell right away, there are ways to resolve the situation.
Methods of Sale
Conventional methods of selling a home does not always work when the real estate market is down. If you’re trying to sell your home for the balance of the loan mortgage rather than fair market value, you can learn quickly that buyers are not willing to comply. There are alternatives to selling your home as a short sale or a lease option that can attract a buyer faster. A short sale is when a lender allows you to sell your home for less than the balance of the loan , as it is estimated to be less than the value loan . A lease option occurs when a buyer agrees to lease the property for a specified period. At the end of the time period, the buyer must purchase the home at a fixed price.
Making home affordable
In February 2009, the Obama Administration created the program Making Home Affordable . The program exists to help homeowners out of predatory mortgages and ease the strain of mortgage debt in financial difficulties. Check to see if you qualify for the program Making Home Affordable before leaving your home to foreclosure. You can experience a situation in which you win in every aspect: mortgage payment reduced and the opportunity to stay in your home.
Impacts on credit
If you plan to buy a new home in the coming years, a foreclosure is not an option when your house is not sold. Exclusion can be treacherous when it comes to personal credit. “The foreclosure affects your credit score 250 points,” explains Jessica Bennet in MortgageFit website. Foreclosures remain on a credit report for 7 years, causing many homeowners being unable to qualify for many types of loans until the stain is removed.
After a foreclosure, a mortgage lender can still pursue the unpaid balance of your loan . This may mean that the balance could haunt you for years after the end of the foreclosure process. “What may be scary is that the judgments do not have to be obtained immediately,” explains Les Christie of CNN Money. A lender or creditor agency can come back after you’re financially well stopped to ensure it is able to recover the debt back. However, not all states allow lenders to continue deficiency judgments. Check the foreclosure laws in your state to determine the risk of failure.