So many homeowners are facing decisions with the economy being slow and they are wondering what they should do knowing their home is worth sometimes 30-40% of what they paid for it just a few years back. I have friends who purchased a home for upwards of 400k back in 2007-2008 and now their homes value is nearing 200K and have no clue what is the best method by means of which way should they go?
Loan Modifications
You have a few options that you can look into if you wish to either lower your payments and those include Loan Modifications but this can take some time with no guarantees that you will actually save a great amount of money to make it worth your while to go through the whole process that can take sometimes 6-8 months and thousands of dollars if you are paying some of these fly by night companies who say they specialize in Loan Modifications.
Some lenders / banks make it very hard to get anywhere when trying to modify your loan and they only do this because if you are currently making your payments why should they modify your loan to save you the home owner any money. You pretty much need to be behind on your payments to get them to work with you but even then you take the chance of damaging your credit that you have worked so hard to get in the first place. Its a tough decision to make when deciding if you are going to let your mortgage fall behind in payments just with the hope that the lender will work with you in lowering your payments enough to make a difference every month that will make it worth it in the long run.
I see way to many homeowners try to get a loan modification done and they always end up getting no where with the lenders and they generally either let it go into foreclosure or attempt selling their home by means of a short sale.
While I do not always recommend doing any of the above I do suggest looking down the road and what makes the most sense in todays market.
Selling Your Home As a Short Sale
If doing a loan modification doesn’t pan out then the short sale process is the next best decision to make to save face and your credit overall. While doing a short sale involves letting your payments get behind it is still a much better solution than letting your home go into foreclosure which will really hurt your credit and by letting your home get foreclosed you are also giving the lenders a reason to come back after you for years to come.
Short Sales when done properly and by professionals who handle the whole short sale from start to finish will save you in more ways than one.
I recently had an investor who we placed his condo for sale and he hired a Short Sale Attorney out of Miami who handled everything and all i can tell you is that from start to finish from the day we listed the property to the time the deal closed was almost 6 months. Now while my investor / seller had if i am correct only 5 total missed payments the Attorney who handled dealing with the lenders was able to allow my seller to walk away with no deficiency judgement, no 1099 and he only had to pay at closing a total of $18.32 to close the sale just last week.
This attorney did a great job with the whole deal but it also cost my seller almost $3000.00 upfront to hire the attorney back in October 2010 to represent him in this transaction. Now while I would say this is a great outcome there is still a better way for homeowners to get the same great service for much much less.
My office Charles Rutenberg Realty LLC, located in Fort Lauderdale , FL have an attorney who works a little differently and offers the same guarantees but for around $500.00 to start. They charge the bank / lender their fees and only make what the lender is willing to pay them at the closing. This attorney tells it like this, If we cant get the short sale approved then how can we justify charging a homeowner $3000.00 upfront when in some cases their is no guarantee that we can make the short sale happen and protect the homeowner from future obligations that the bank may try and come after the homeowner for future payments and or money in the form of a deficiency judgement?
This company has closed many deals for our office and stands behind their services and I always try to get my homeowners / sellers to use there services in all of my short sale deals here in South Florida.
The reason behind this article is only to help homeowners understand their are options when it comes to selling their home even if they are upside down currently. While there are no guarantees that you can modify your loan, sell your home as a short sale these are 2 good options to look into other than just ignoring the phone calls from the lender demanding payments and then eventually getting foreclosed on. Short Sales seem to be the best solution even though you will have to rent for a few years till your credit improves but in the long run this will help you get back on track and plan for a much better future.
My name is David Rogers, and I’m a licensed realtor who loves to provide high-level service. Please let me know how I can serve you!