Saturday, April 29, 2006

What Is Foreclosure And How To Avoid It?

Are you having trouble making ends meet? Not paying your bills on time? Are you not able to keep up with your mortgage payments and continue to get further and further behind? How do you get yourself out of this mess and not lose your home?

Avoiding foreclosure may be possible and you should work hard to avoid it.

What is foreclosure?

Foreclosure is the legal means by which a bank or other secured creditor sells or repossesses your home or a piece of real property due to your default on its promissory note. When your house is foreclosed on, you must move out and it is usually sold at public auction. When the foreclosure process is complete, it is typically said that "the lender has foreclosed its mortgage or lien."

In the United States, there are two sorts of foreclosure in most common law states. Under "strict foreclosure," the bank claims the title and possession of the property back in full satisfaction of a debt, usually on contract. In the proceeding simply known as foreclosure, the property is exposed to auction by the county sheriff or some other officer of the court. Many states require this latter sort of proceeding in some or all cases of foreclosure, in order to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the property. In this type of foreclosure, a deed is issued to the winning bidder at auction. Banks and other institutional lenders typically bid in the amount of the owed debt at the sale, and if no other buyers step forward they get title to the property in return.

Some states have adopted non-judicial foreclosure proceedings, in which the mortgagee, gives the homeowner a legally specified notice of the default and the mortgagee's intent to sell the property. If the homeowner fails to cure its default, or use other lawful means, such as filing for bankruptcy to stop the sale, the mortgagee or its representative will conduct a public auction in a similar manner as the auction described above. The highest bidder at the auction becomes the owner of the property free and clear of any interest of the former homeowner.

What Should You Do To Avoid Foreclosure?

• Do not ignore letters from your lender. If you are having problems making your payments, call or write to your lender's Loss Mitigation Department without delay. Explain your situation. This shows good faith on your part. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.

• Stay in your home for now. You may not qualify for assistance if you abandon your property.

• Contact a HUD-approved housing counseling agency. Call (800) 569-4287 for the housing counseling agency nearest you. These agencies are valuable resources and they frequently have information on services and programs offered by Government agencies as well as private and community organizations that could help you. The housing counseling agency may also offer credit counseling. These services are usually free of charge, and they can help explain possible alternatives.

Some of the possible alternatives you may consider include the following:

Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses. You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.

Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount.

Partial Claim. Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current.

Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.

Keep in mind that your lender does not want to force foreclosure proceedings because it costs them a lot of money to do so. Therefore, if you are sincere and show good faith, they are more likely to work with you to find a solution. Foreclosure can seriously affect your ability to qualify for credit in the future. So get the help you need and avoid it if at all possible!


About The Author: Greg Smith publishes information on real estate issues at Visit his web site for top resources on unique and popular topics. This article may be freely reprinted as long as the author's resource box and url links remain intact.

Tuesday, April 18, 2006

The Home Buying Process: What Steps To Make

By: Jason P Bertrand

There are several steps to take in the mortgage process. The following is a list of the best steps to take in order to ensure a smooth and simple transaction.

1. Get Pre-Approved First

During the pre-approval process all the information necessary to complete a mortgage transaction will be collected. A pre-approval is substantially different from a pre-qualification. A pre-approval is the process of actually getting approved for a mortgage without having an actual property picked out yet. Having a pre-approval helps substantially and will also help in negotiating with a seller. After all, a pre-approval tells the seller that your offer is already approved and informs them that you are ready to move forward with the purchase.

2. Making Verbal Agreements

There is simply no such thing as a verbal agreement in Real Estate. If there is something that you would like the seller to agree to, make sure they agree in writing. If there is a verbal agreement made, there is no feasible way to prove that that agreement was made. On the sales contract make sure everything that you are requesting is either agreed to or denied.

3. Find Your New Home

Now, with your pre-approval letter in hand it is time to search for your new home-to-be. Look at several properties, even if the first one you see seems as though it may be, "The one." Once you have chosen your new home write a sales contract and give a deposit. Then forward the sales contract to your broker to accompany the rest of the documentation you have provided. Due to the fact that you already have a pre-approval the loan process should be relatively quick.

4. Lock in Your Rate

It is important to notify the mortgage company that you would like to lock in your rate. Once a rate is locked you have a certain amount of time to close. You can lock a rate for 15 days, 30 days, 60 days, and in some cases 90 days. Once you have locked the rate, you are guaranteed that the rate will not fluctuate. You also have the option to float the rate. If you float the rate and the rate goes down you could then lock at a lower rate. If the rate goes up you would be subject to a higher payment. It is always suggested that you lock the rate due to the volatility of interest rates. You may ultimately have to pay a higher payment if you decide not to lock your rate and rates increase.

5. Get a Professional Home Inspection

It is always wise to have a home inspection done. A home inspection is done by an independent home inspector. A home inspection involves the home inspector going through the home prior to purchase. In some cases a house that looks beautiful from the outside may have some underlying issues that may be unseen. It is important to know ahead of time if there are any issues with the property. A home inspector will make sure all of the outlets work, that there is no water damage, and that all of the appliances work. They will assess all of the homes mechanical systems and make sure everything is in working order. They will also let the home buyer know of any current issues or any items that could become issues.

6. Close on Your New Home

Get a copy of all of the loan documents prior to closing. It is important to be able to read through all of the documents as time may be limited during the closing. Always call your broker ahead of time with any questions. Never close on a property without having ample time to review the closing documents. After reviewing all of the documents set up a closing with the seller and your attorney. At the closing table make sure you have all the required checks and documentation. You should receive a checklist prior to closing. Remember, never sign anything you do not understand, and ask plenty of questions to make sure you understand.

This article was posted at on 2006-03-23. Webmasters and publishers are free to reprint this article as long as the resource box and all the links remain intact.