If you’ve found yourself in hot water with your mortgage company, the first decision to make is whether you genuinely believe you can catch up your payments or if the best solution is to give up your home. If your plan is to save your home, you will need to work out a budget and plan for repayment of the past due balances. If you believe you cannot get caught back up, then the best course of action is generally to identify which options will help you move on without sinking your credit.
Ideally, your first point of contact should be to your existing mortgage company. If you already know how much you can afford to pay back each month, they may be able to give you an alternate payment plan that will help you avoid foreclosure to begin with. Sometimes, banks will also agree to a “deed in lieu of foreclosure,” meaning you’ll sign the home over to the bank, or they may agree to a “short sale,” which refers to selling the home for a price that’s short of what is owed. This option is generally only viable if the bank is considering auction and you’ve got a reasonable offer. It can help minimize the impact on your credit, but it can still drop your score 100-150 points. Considering that bankruptcy can reduce a score by 150-240 points and still may not help you save your home, a short sale may be the preferable option. Conversely, speaking to your mortgage company about having someone assume the mortgage, or take it over, could also work, though most contracts specifically exclude this option.
Lastly, Arizona hard money loans can be a viable option to help you bridge the gap, regardless of whether you plan to keep your home or not. Depending on the terms offered, you may be able to qualify for as much as 90% of your home’s value. The funds can then be used to pay off your existing mortgage, buying you some time to sell the home for maximum value, in which case your credit score won’t take the same hit as it would with a short sale or bankruptcy. Or, you may take advantage of reduced/ interest-only payments for some time until you’re able to qualify for a traditional mortgage again.
Whether you’re going with Arizona hard money loans or any of the other options mentioned, having a strategy is paramount. You will need to know what your end goal is and have worked out your financials in advance; do not move forward unless you know you will have the funds to meet obligations. Granted, this is common sense, but the possibility of losing one’s home can cause some to make emotional decisions, such as moving forward with the hope they’ll be able to pay, rather than the knowledge they will.
When you’re facing difficulties, such as a potential foreclosure, there are no magic bullets. Explore your options carefully and learn the benefits as well as drawbacks of each. If Arizona hard money loans seem like the best possible option for your needs, talk to a seasoned broker to get the best terms possible.
Level 4 Funding LLC
Hard Money Lender
Hard Money Loans
Hard Money Loan
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis Dahlberg Broker/RI/CEO
NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave | Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 43 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.