Jan
8
Is it “better” to let house go into foreclosure or stay current on other credit and loans?
Filed Under Renting & Real Estate
unclegiorgio@sbcglobal.net asked:
The house is upside down by about $60,000.00 at this moment.
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The house is upside down by about $60,000.00 at this moment.
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4 Responses to “Is it “better” to let house go into foreclosure or stay current on other credit and loans?”
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Contact the lender and request a brand new appraisal. The lender does NOT benefit if you foreclose (they will lose the $60,000 –or more at auction).
Ask the lender to forgive part of your loan. Some have been doing that in the past year. If they have to foreclose, they have an undervalued house that they then have to try to dump.
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Do NOT foreclose. It’s better not to let the house go into foreclosure, period. Stay up on the house, or get current on it.
If the house goes in to foreclosure, you will still owe the difference between what it sells for and what you owe on it.
For example, let’s say the house is a $100,000 house and you owe $160,000 (you said you’re $60,000 upside down). You are foreclosed and it sells in foreclosure for $50,000 (very possible). You still owe the bank the other $110,000.
On the other hand, if you sell it yourself, you likely could get more for it. And there are other options,
Real estate is depressed in many places right now, so the timing is not perfect, but it still is a better solution than going into foreclosure.
One of the best resources for direction out of your current dilemma is. Check it out. You might call his nationally-syndicated show and ask him your questions. It’s worth it.
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You may want to consider trying to sell the house. Many lenders will allow you to participate in a “workout plan” called a short sale. In the mean time I would do my best to stay current on other credit and loans while paying what I can afford to the mortgage.
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If you are upside down in your home I have a new program that can help you out. It’s called a short refinance.
Greatly simplified, this is how it works:
You owe 200k (for example) and your home is now only worth 140k. Instead of foreclosing, the lender agrees to forgive the 60k of debt and refinance the mortgage for $140k — a loan you can afford.
Think about it, the lender is going to take a bigger hit if you go into foreclosure than if you modify, so it makes sense financially for both of you to do this.
My company in California specializes in negotiating these modifications. We work on behalf of the borrower and we have a 97% success rate thus far.
email me if you want to know more, good luck.