First, a disclaimer.  Foreclosure is a very complicated process with far-reaching results.  I cannot stress this enough:  consult your lenders, your attorney, your CPA and your real estate professional to ensure you fully understand all ramifications of the options discussed below.

As the economy declined during the last year, homeowners faced many difficult choices.  Regrettably, some are staring at the devastating prospects of foreclosure.  Foreclosure can be avoided in certain instances.  In the first part of this post, let’s address a few of the less drastic options. 

Rent the Property - if the mortgage payment is low enough that market rent will cover it, this option will allow you to retain your property indefinitely.

Refinance – If you have sufficient equity in the home and your credit is still good, refinancing is a possibility.  Given today’s interest rates, refinancing should lower your payments, but it may be an expensive process.

Service Members Civil Relief Act (Military Personnel Only) – If an active duty member of the military is in financial distress, they may qualify for lower payments on all their consumer debt as well as mortgage payments.  Read more about the Service Members Civil Relief Act.

Mortgage Modification – with this option, the loan’s interest rate or principal balance is reduced by the lender.  The result is a lower, more affordable payment for the homeowner.  Owners must qualify for this option and are required to supply all necessary documentation to the lender.

Contact Michael Zimmerman if you need a referral to a reliable Property Manager or a great mortgage professional.

Read Part 2

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