It is a really tough situation but the good news is that you have options. In this article we discuss some of the options; you need to keep in mind that these solutions are not quick fixes. You need to ask yourself whether this is a temporary problem or a systematic problem, it may be uncomfortable but in order to find the best solution you need to be honest with yourself. Asking yourself such hard questions will help you choose the best decision according to your current financial situation, but for now here is what you need to know.
Don’t ignore the bank
The bank is your friend; when you are behind on your payments expect an email notifying you on the amount owed. I know you are tempted to ignore it but that is far the worst thing you can do.
The truth is your bank doesn’t want to foreclose. It’s not in their best interest to lose a paying mortgage holder or go through the foreclosure process.
Your bank would rather work with you, so first and foremost step is to begin talking to the bank and explain your situation. Now that you have made clear your intentions to make things right, here are your options:-
1. Rent out Your Home
Attachment is a normal emotion especially if you can’t bear to sell it; the best option is to rent it out. It may not be an ideal solution especially if you have a family it can be a hard sell to convince them. Renting out a part of your home gives you an extra income stream helping you with part of your mortgage payment. What you can do is a bit of renovation maybe partition one of the bedrooms with an outside door, here you will still preserve your privacy. A stranger in your home can be intimidating but in the long run you still get to keep your home and maintain the same lifestyle.
2. Borrow Funds
Another way you can deal with your loan is by borrowing funds from HUD or similar resources. The loan can cover your back payments but keep this in mind you will be adding debt to your home. In such a case you need to evaluate your situation and ask yourself tough questions. First question, will you be unable to afford the house in future? Second question, will you be able to make up payments and get back on track? Getting into further debt on your house and not been sure of your ability to keep it means you are just leveraging on your equity. If the payments are still too high and you want to sell your house in future then you might not have enough equity left for a traditional listing. Before taking this option you need to be sure you will be regaining a substantial amount of income in future.
3. Give Your House Back To the Bank
Another option you have is to give your house back to the bank. The bank gives you certain options such as deed in lieu of foreclosure, and cash for keys program with the bank. Why would you even consider going all the way to foreclosure? It’s because default judgments and 1099s can actually be considered income on your IRS returns. In this case your lender can notify the IRS of the debt that was forgiven in a foreclosure or short sale, in turn as the owner you would then owe taxes on the amount of debt forgiven as it is now viewed as income. It sounds unfair but that’s just another option.
4. Sell Your Home
It’s a heartbreaking option but it’s safer especially when you are behind on your payments. its safer than trying to attain loan modification or other forms of financial adjustments, in many ways this just delays the inevitable. Unless you know for certain that your financial situation will change then you can consider loan modification, but if the future is uncertain you will just be getting into more debt. More debt means more problems and you will be facing foreclosure inevitably. Selling your house is the best option and you can pay off what you owe while still walking away with a little bit of cash.
Houston capital home buyers understand this can be a stressful and worrying situation. It can be harmful to the state of your health and deeply affect those around you. Keep it together, take a deep breath then take an honest stock of your current options. Remember the worst thing you can do is ignore your problem and wish it to go away. We can help you evaluate your situation and offer solid advice on the best possible solution. If you’re best option is to sell then check out our cash offer, we close deals in a matter of days.