Options Available to Home
Owners in Financial Hardship

During volatile economic conditions, it is important to know the options available to home owners in financial hardship. The importance of this is highlighted by the fact that normally, homeowners are some of the hardest hit and face losing more because of the potentials of foreclosures.

By being informed on the options available to home owners in financial hardship they will be able to make more educated decisions on which path to follow. Financial decisions undoubtedly are critical during delicate economic conditions.

There is no doubt that the options available to home owners in financial hardship will help them in their struggle to payoff mortgages as well as other monetary challenges. Furthermore, by giving them legitimate options, they can consciously steer away from unscrupulous individuals or organizations that can dig an even deeper financial hole for them.

It is imperative to understand that some options available to home owners in financial hardship may include a certain level of sacrifice on their part, but will ultimately achieve the goal of hurdling through their current monetary problems.

The Option of Short Sale

It is a sad fact that when it comes to options available to home owners in financial hardship, this is the last one considered. Unknown to many homeowners, this is actually one of the best solutions to their monetary problems. What makes it difficult though is that a short sale involves the selling of the property in mortgage.

Moreover, the amount that is generated is commonly less than what is owed to the lending facility. In short, proceeds of the sale are not adequate to cover the entire outstanding balance of the loan amount.

Other conditions which make this the least considered of the options available to home owners in financial hardship is that the lending facility must approve the short sale and that the lender must agree to accept a payment that is less than what is currently owed by the borrower.

The approval period is also quite substantial and can take anywhere from 3 to 6 months. With such challenges, how can a short sale be one of the best options available to home owners in financial hardship? One of the advantages of using the short sale solution is that the credit impact is not reflected as a foreclosure and therefore will not have a very devastating effect on the credit score of the borrower.

Another reason why it is one of the best options available to home owners in financial hardship is because it allows for the sale of the mortgaged property at a low price making it easy to be taken out of the market. Keep in mind that lending facilities such as banks would rather have significant amount of money paid back to them than have nothing at all.

Keeping this in mind, you can propose to the lending facility to forego any uncovered amount from the sale. Agreements like these are becoming more common in the United States because it benefits both the lender and the borrower. Other beneficial factors why a short sale can be considered as one of the best options available to home owners in financial hardship include:

1. Salvaging the credit history of the borrower.
2. Provides a unique solution to a potentially embarrassing situation.
3. Helps reduce the stress on the part of the borrower searching for funds and an equally stressful situation on the part of the lender trying to collect money.
4. Definitely provides a faster and more practical solution to mortgage foreclosure.

Loan Modification Program Option

In the context of evaluating options available to home owners in financial hardship, the Loan Modification Program is another viable alternative. The design of this solution is that it restructures the existing loan of the borrower to arrive at lower monthly payments with potentially the same level of interest rate.

The borrower does not have to give up his home while renegotiating for a more affordable payment scheme. The lender on the other hand does not have to contend with costly foreclosure fees. The lender also benefits by lowering the interest rates but lengthening the repayment period for the loan amount.

In some cases, the loan amount may be reduced but the interest rates may be raised a bit. To take advantage of this solution, a hardship letter must be sent to the lending facility. The borrower must also notify the lender of the current financial situation and the execution of the hardship letter.

The entire process of evaluating the validity and eligibility of the hardship letter can take anywhere from one to three months. When the modification is approved a new contract stating the terms and conditions of the restructured loan will be sent to the borrower. Fees and charges may also be applied to the new loan similar to applying for a fresh loan.

Keep in mind though that because the repayment period has been extended substantially, there is the risk that you may end up owing more than you originally did. Moreover, this solution has a severe negative impact on the credit history of the borrower.

Option of Deed-in-Lieu of Foreclosure

The deed-in-lieu of foreclosure is one of the options available to home owners in financial hardship because it allows the borrower to assign the deed back over to the lender. The lender must show no interest in the property before this should be done; otherwise the borrower runs the risk of having the property auctioned off. This solution is not commonly practiced but is a convenient way to avoid paying costly fees.

For this solution to work, both parties must be in agreement to its terms and conditions. Usually the lender will only agree to take back the property based on the current fair market value or similar to that of homes within the area.

This type of solution is not one of the best options available to home owners in financial hardship because it seems to give more benefits to the lender rather than the borrower. Furthermore, the credit history of the borrower becomes extremely tarnished.

Although financial challenges are severely unwanted, there are instances where in they become unavoidable. With the housing market remaining somewhat unstable, it is not surprising to see many property inventories happening. Because of this, it is extremely important to be aware of the options available to home owners in financial hardship to be able to use the right solution.

Have additional questions? Contact Us at the Short Sale Specialist Network Today! 1-877-737-4903