Options for Avoiding Foreclosure in San Diego
What are Your Options to Avoid Foreclosure?
Are you are falling behind on your mortgage payments or expect you will soon?
If the answer is yes, it is time to learn more about what your options are to avoid foreclosure.
When you fall behind on your mortgage payments, you may receive mailers or phone calls offering to help you out of a difficult situation. Many of these people however, are looking to take advantage of you.
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DO NOT SIGN anything with anyone offering a service that seems to good to be true. Learn more about Foreclosure Scams and what to watch out for.
Gregg Watkins and Watkins Realty Group Team are here to work with you and make sure that before you do anything, you know all of your options.
We have assisted many clients in working through challenging issues with their home and helping them find a solution that makes the most sense for them and their individual situation.
And best of all, we counsel and help people with NO UP-FRONT FEES.
San Diego Foreclosure Options
Here Are Several Options to Consider:
Option # 1 - Refinance Your Home
If you have an adjustable rate mortgage and the payments are increasing, the first option to consider is to refinance into a fixed rate program with affordable monthly payments. Watkins Home Loans works with many lenders and can provide you with numerous loan options.
The challenge with refinancing today is that banks have tightened their credit and lending guidelines on virtually all loan categories. Credit, income, and debt-to-income measurements are all stricter now, making it more difficult to refinance. Additionally, many homes have lost value, causing their equity to be “upside down.” These homes would require a substantial cash payment to refinance the loan balances in excess of the home value. Nonetheless, this should be one of the first options to consider.
Option # 2 - Contact Your Lender and Negotiate a Loan Workout
The best way to avoid foreclosure is to prevent the filing of a Notice of Default. Lenders do not want to foreclose but will file a Notice of Default to protect their interests, if necessary. If you know you are unlikely to meet your mortgage obligation, the first thing you should do is call your lender. Don't put it off, be embarrassed or ignore letters from your lender because those responses will make the situation worse, not better. Depending on your particular situation and hardship circumstances, here are some options you may discuss that would allow you to stay in the home:
- Special Forbearance Plan
Your lender may agree to a temporary reduction or suspension of your payments. The delinquent amount will be repaid over a specified period of time or added to the back end of your mortgage. You may qualify for this if you have can show a temporary hardship, such as a job loss. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.
- Mortgage Modification
Your lender may agree to refinance the loan, freeze your interest rate, and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level.
Option # 3 - Sell Your Home
If a loan workout or refinance appears unlikely, consider listing your property for full market value and use the proceeds to pay off the bank in full. Using an experienced Watkins Realty Group Realtor will help you maximize the potential gain on the sale of your property and help increase your chances of paying off the bank in full.
Option # 4 - Short Sale Your Home
If your home is worth less than the amount you owe, you may be a candidate for a short sale.
A short sale occurs when the owners sell their property for less than the balance owed. The lender accepts the sale proceeds as full satisfaction of the loan.
How does a short sale make sense for both parties?
- The sale allows the lender to avoid the expenses of foreclosure proceedings and from having another REO property on its books.
- From the borrower’s perspective, the short sale prevents having a foreclosure on their credit history, and releases the borrower from an obligation they can no longer afford.
A short sale requires significant paperwork and preparation on behalf of the borrower. Negotiating a short sale takes a team that is experienced and understands the short sale process. Watkins Realty Group has short sale experts who have helped many homeowners sell their properties on a short sale basis, and can help you as well.
Option # 5 - Contact Your Lender about a Deed-in-Lieu of Foreclosure
As a last resort, you may be able to voluntarily "give back" your property to the lender by signing a Deed-in-Lieu of Foreclosure. The homeowner gives the lender a notarized deed, and the lender forgives the mortgage, thus canceling any further foreclosure action. You may qualify if:
- You are in default and don't qualify for any of the other options
- Your attempts at selling the house before foreclosure were unsuccessful and
- You don't have another mortgage in default.
However, deeds-in-lieu of foreclosure are not typically as beneficial to your credit as a short sale. Think of a deed-in-lieu of as similar to a voluntary automobile repossession.
Option #6 - Do Nothing and Let the Property Go
Some people find the whole situation overwhelming and simply ignore all the lender phone calls and letters, knowing that ultimately the home will go into foreclosure and bank will eventually seize the home. Though it may seem like the easiest thing to do at the time, we do not recommend this.
We strongly recommend you speak with the lender(s) and determine it there are any good options there. If not, we would recommend attempting a short sale, as this will typically be much better for your credit score, and will help you buy your next home sooner and at better interest rates.
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Contact us for more information and we will be happy to provide you a free consultation with additional information about what options make the most sense for your individual situation.
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