Foreclosure, Deed in Lieu, Loan Modification, Or Short Sale - Which One is Right For Me?

In today's current real estate market, many homeowners are finding themselves owing more than their home is worth. The term "underwater" seems to be more common than ever. Many options are available. The following information may help you get moving in the right direction.

There are many types of loans secured by real property. Purchase money loans, refinanced loans, and home equity loans are the most common. The type of property and the type of loan will establish what remedies a lender will have if the homeowner becomes unable to make their current payments. Available programs as well as the current and future financial stability of the homeowner will also have an impact on the banks decision.

A loan modification consists of an agreement between the homeowner and the bank to change the terms of the existing loan. This would be done by extending the term of the loan, reducing the interest rate, or reducing the principal balance. The lender usually does not agree to adjust all three provisions.

If the lender does not agree to a loan modification, a refinance may be the next option. The HOPE for Homeowners program will refinance an existing mortgage into a new loan insured by the Federal Housing Administration, also known as an FHA loan. This option under the HOPE for Homeowners plan does not apply to property owners with existing FHA mortgages.

A Deed in Lieu of Foreclosure allows the homeowner to "give the home back" to the bank. This scenario is a little less damaging to your credit rating. However, a Deed in Lieu of Foreclosure is typically only available if there is one lien or loan on the property.

Doing a short sale requires selling the property for less than what is owed. The bank must agree to this in conjunction with the homeowner. Financial hardship, medical problems or divorce are a few of the hardships a bank considers when approving a short sale. A short sale is not automatic. Advice from legal counsel and a qualified Real Estate agent should be part of this decision.

Foreclosure is also an option for many homeowners. Depending on the type of property, type of loan and the State in which the property is located, a foreclosure may have the least financial ramifications. This decision should not be made without seeking the advice of legal counsel. Do not take legal advice from family, the internet, or anyone who is not qualified to render such advice.

As you can see, there are many options to choose from. Finding the right one may take a little research as well as some advice from various legal professionals. Always beware of "rescue" scams and fraud. No one can predict what the bank will decide. Good luck.

Exclusive representation to buyers and sellers is a complex venture. Real Estate Homes, LLC philosophy has accomplished this with great success. For more information on distressed property options and information on Phoenix Homes for Sale or Tucson Homes for Sale, please visit Real Estate Homes, LLC where you can search for all available homes for sale.