If you fall behind on your mortgage you may feel pressure to act quickly, before you fully evaluate your options and have an opportunity to select the course of action most appropriate for your situation. At the same time, you will likely be contacted by people who will present you with “solutions” and attempt to persuade you to work with them.
Some of the “solutions” will be legitimate. Unfortunately, there are many who have identified the current mortgage crisis as an opportunity to profit from the misfortune of others. Unless the actual foreclosure sale is so close that you don’t have time– as in days, not weeks – take a little time to gather information and solicit input from sources you trust.
So, here they are, the five things you should NEVER do if you fall behind on your mortgage:
Number One – Do not act before you have considered your options.
Do not feel the need to make any major decisions before you have had a chance to do some homework. Do not succumb to the pressure of those that have an agenda – their own, of course – out of fear. Take time to gather enough information to make an informed decision.
Number Two – Absolutely do not EVER deed your property to a third party without confirmation your loans have been paid off.
Note: If you believe this option is best for you, consult with an attorney – yours – before completing the transaction.
If you deed your property to someone else, they become the one who owns the property – they control it. They can rent it, sell it, move into it, or use it in other ways.
What is highly likely is that the new owners won’t pay the mortgage.
And, that is a problem for you. The lender will still look to you for payments, and, if the payments don’t get made it will be reported on your credit file.
You remain the primary party responsible for repayment. The damage to your credit could be devastating.
Number Three – Do not give a perspective buyer the power to deal directly with your lender.
A buyer looking to work with your lender to get approval of a sale is looking to purchase your property at a discount – likely a very big discount.
Negotiating a Short Sale takes a lot of time under the best of circumstances. When the buyer is attempting to get approval at a price well below the market, there is no telling how long it might take. All the while, the clock is running on the lenders foreclosure action.
If the buyer is unable to get approval at the price they feel they need, the buyer may opt not to buy your home. The buyer’s decision not to purchase could come so late in the process that there is not enough time left to pursue other options. It might be too late to avoid foreclosure.
In addition, you have no control over the manner in which your financial situation is being represented to your lender. It is entirely possible that a buyer dealing directly with your lender could present your file in a way that makes it very difficult to accomplish anything with your lender later if this deal does not go through.
Number Four – Do not sell your property at a dramatic discount.
Unless the foreclosure sale is less than thirty (30) days away, you have time to get your property sold and save your equity.
The property is yours, the equity belongs to you.
Number Five – Don’t do nothing.
A surprising number of people simply allow the foreclosure to run its course. Foreclosure can be avoided.
With a bit of effort you can find a solution that will keep a foreclosure off your credit record.
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