More on FHA Refinancing and Avoiding Foreclosure

Sometimes changes in life could force you to sell your home.  The loss of a job, illness, disability, divorce, or other factors could make it impossible to keep your home.  The FHA has various suggestions for how to sell your home in the case that you need to sell quickly because you can no longer afford you monthly mortgage payment.

These suggestions include:

•    A normal sale.  You can list your home for sale by owner or have a real estate agent sell it for you.  There are fees involved with a real estate agent, but the home could see faster this way.

•    A short sale (also known as a pre-foreclosure sale) is when you sell your home for less than what you owe.  If the real estate market declined in your area or you borrowed so much in equity on your home and now it is worth less that what you owe on it, then your lender may be willing to take less than what you owe.  You must have been trying to sell your home with no offers, be behind on payments and unable to catch up or make current payments, and an appraisal shows that your home is worth less that the loan payoff.

•    You can give back the house to the lender.  The lender may allow you to be clear of your mortgage loan debt if you give up your rights to the home and turn over the deed in full to the lender.

•    Mortgage assumption. This is when a buyer takes over the mortgage and assumes payment.  This buyer will now own the home and you will no longer be responsible for mortgage payments.

All of these are the ways in which the FHA suggests that people who need to sell their home do so in order to avoid foreclosure.  It may be difficult to sell, but if there is no other choice it is better to make arrangements so that foreclosure can be avoided and your credit can be preserved for the future.

Pre-Foreclosures Explained

A “Pre-foreclosure” is the term referred to by mortgage lenders as the time period from when the lender notifies the borrower that they have defaulted on a payment, and when the sale of the property to the lender at an auction is finalized. Pre-foreclosure sales can be an option to borrowers who need to pay off their mortgage. The United States Department of Housing and Development has organized the Pre-foreclosure Sale Program which allows the borrower who has defaulted on payments to sell the house, and use the profits from the sale to pay off the mortgage debt.

This can mean great news to prospective homebuyers. When the borrower is looking to sell his house, they are looking to sell their property for either at least 63% of their outstanding debt, or 82% of estimated sales proceeds, and they are in a hurry to sell so delinquent payments do not accumulate. This usually results in properties that are priced to sell, and sellers who are in a hurry to sell them. These purchases can be great deals for first time buyers, and such purchases, just as the large percentage of properties out there, are applicable to have a FHA loan taken out on them.

The easiest way to avoid pre-foreclosure, or foreclosure in general is to make your mortgage payments on time, and never to default. MortgageLoanPlace.com offers the service of finding great FHA loans, among other types of loans, which are perfect for first time, or repeat homebuyers. Finding a payable loan that works for you is easy with thanks to our helpful customer service representatives, and our database of frequently asked questions. Visit our loan pages, and you’re next loan is just a few clicks away.

Creative Mortgages Leading to Foreclosures in Virginia

An interesting (and well-done) study in Virginia reveals the plights of many homeowners now facing foreclosure due to what have been deemed “creative” lending practices when it came to re-working their home mortgages.  This is just more evidence that the government should take some action to help guard against a widespread foreclosure problem in our country in the near future.

The article, which is from PilotOnline.com (read full story here), also mentions last week’s statement issued by the National Association of Realtors (NAR) calling for the HUD to push through legislation changes to make refinancing mortgages more flexible under the Federal Housing Administration.

FHA refinances appear to be emerging as the best option for homeowners caught in subprime and option ARM loans with monthly payments that they cannot keep up with.  Stay tuned to our FHA Lending Guide for more news as it develops.