Your lender just gave you the bad news. Your loan modification has been declined, and you are trying to determine the next step. You, definitely, don't want to have to deal with a foreclosure, but are unsure what to do next! It's important for you to understand that you're not alone. Statistics show that approximately one in seven homeowners are behind on their mortgage payments and over eighty percent of loan modifications are being declined. That means that the odds of being in your situation are about the same as being left-handed. You have a great deal of company. With that much consumer hardship, there are more options today than ever before! Whether offered by your own lender, or the Federal Government, programs exist to assist struggling borrowers through these difficult times.
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The first thing to consider is whether or not to try and apply for the modification all over again. Your loan modification could have been a really bad idea from day one. Unless your lender has offered you a fixed rate loan with ample principal reduction, being declined for a modification could be one of the best things to ever happen to you! If your mortgage balance is more than twenty percent greater than the value of your home, a loan modification could add fifteen years or more to the length of your mortgage. If you want a real wake-up call, find an online amortization calculator and see how long it takes to pay your loan down to your current home value. If you owe $250,000 on a home worth $200,000, you will owe more than $200,000 until the middle of 2029. That's right, your two year-old will be able to buy you a drink to celebrate!
Depending upon your overall financial position, bankruptcy can be a viable alternative to a foreclosure. If credit cards, personal debt, judgments and other bills are adding to your mortgage woes, then bankruptcy may be an integral part of a solution. Thankfully, obtaining the guidance of a good bankruptcy attorney can be a great way to help get yourself back on track. Although bankruptcy can forgive large amounts of debt in one fell swoop, the credit effects from bankruptcy can last as long as ten years. With that in mind, bankruptcy is an extreme solution that should be approached very carefully.
I have found that, most often, homeowners can benefit greatly from successfully completing a short sale. You can take advantage of the current anti-foreclosure attitude in Washington to really get back into home ownership as quickly as possible. Many lenders are offering incentive programs allowing you to sell your home for less than what you owe, and still walk away with money in your pocket. One lender is even offering qualified homeowners a cool $5,000 in relocation assistance money! Even the United States government is getting into the game, through the HAFA program. Under HAFA, you can get a price approved before even putting your home up on the market, perform a short sale and, if you qualify, get $3,000 of money at closing. In addition to being able to purchase a new home in as little as two years, your credit won't suffer the same kind of catastrophic effects as it would from a bankruptcy or foreclosure. Employing a Realtor specializing in short sales is a great place to start. They are up to date on all of the current rules and regulations about short sales, don't charge any up front fees and don't make any money at all until they successfully complete your short sale. Finding the right Realtor to represent you is very important to make sure that you achieve your goal of being released from all financial liability from your lender.
The most important thing for you to remember is that, whatever direction you choose to go, choosing a licensed professional who specializes in your area of need is the only way to go. Make sure to personally interview any potential candidates. State license boards, professional organizations and trade groups all keep diligent records that are readily available to anyone seeking information about a particular practitioner. This is your financial future that you're addressing here. You can't be too careful. A qualified professional will want you to know all about their business history and qualifications! Real pros are proud of their accomplishments and more than happy to share them openly. With a little bit of diligence and care, you are well on your way to bringing piece of mind and financial stability back into your life!
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