Options for Struggling Homeowners
Options for Homeowners Struggling with the Housing Market
In today's climate, many homeowners are struggling with the decision to default due to loss of value, loss of income, and the inability to refinance to reduce mortgage payments. There are options available for homeowners not sure what the next step is in the homeownership puzzle.
1) HARP 2.0 Refinance-If your home is owned by Fannie Mae or Freddie Mac you may be eligbile for the program. It allows homeowners to refinance with no limit on the loan-to-value ratio. For example, qualifying borrowers based on credit, income and loan application may qualify even though the value of their home is far less than the amount they owe. This may assist the more than 9 million homeowners struggling with underwater mortgages. Click here for more information on HARP.
2) Strategic Default-According to the article in Reuters through Yahoo, homeowners who owe much more than their home is actually worth and are "underwater" on their mortgage loans are choosing to default on the loan after purchasing a new home and obtaining a new mortgage. Click here for the article. Many lenders became savy to this a few years back and do make the process slightly more difficult. Homeowners considering this option must usually qualify for both mortgage loans under the current income, credit and asset guidelines of the banks or have their current home rented for 6 mos. to reflect landlord status prior to qualifying for a new home loan.
3) HAFA Short Sale-A HAFA Short Sale allows homeowners who have lived in a property with an owner-occupied status within the past 12 months. The current mortgages must be less than $729,750 to qualify and no felonies within the past 10 years. The HAFA program was designed to assist struggling homeowners with the costs of relocation and moving expenses after the short sale closes. Sellers can receive up to $3,000 in relocation expenses with the program. Click here for more information about HAFA.
4) After the Sale-Continue to save, save, save! FHA allows lending 2 years after a Short Sale. Homeowners have already taken advantage of the FHA program which allows 3.5% down payment on conforming loan amounts. Working on increasing the FICO score through making your other creditor payments on time will assist in boosting the score.
5) Consult a professional-Real estate attorneys, bankruptcy attorney and tax advisors can be worth their weight in gold. Many have a free consutlation option. Referrals and online review boards are often a great resource to find the right person for you.
We offer free consultations and are happy to assist with questions regarding your home market value.
