By Patti Gilman, Coldwell Banker Weir Manuel www.callpatti.com
One thing we in Michigan constantly hear from around the country is that our economic situation is hopeless. As a Realtor, I can't control what people say or what they believe about our current predicament. But what I CAN control is how people feel when they're upside down in their homes. I want to tell you, that no matter your situation, there IS HOPE for those of you who feel trapped in homes you can't sell.
It doesn't matter if you're behind in your payments or not, when you work with a qualified Realtor and lender, there's always options and always more hope than you thought. Whether you work towards a loan modification, a short sale or engage your rights in a foreclosure process, there are ways you can manage your current situation in your favor. But you have to be aware of your options, because your lender treats each one separately.
Loan Modification Under the terms of a loan modification negotiated with your lender, you can potentially move from an adjustable rate mortgage to a fixed mortgage and from a higher interest rate to a lower one, depending on your credit and a number of other factors such as how many loans you have on your property. This must all be coordinated with the lender and people who are in the market with the expertise to help you meet the necessary requirements.
Short sale If you owe more money than your home is worth (that's a lot of you), we can work with the lender(s) to get them to accept less than what the house is worth, with the eventual goals of doing the least amount of damage to your credit and so you owe no money at the end of the process. That's the tricky part.
The ultimate goal is to have it recorded to the credit bureau and have the home paid off as agreed. That way you know the debt is settled. There are a number of reputable companies out there who specialize in short sales who work with Realtors like me to help you make sure you have the reams of information you need that the bank requires, from hardship letters to your complete financial statements. Ultimately if the short sale option does not work, your lender can take it all the way to ….
Foreclosure Even in the last resort of foreclosure, you need to know you have rights in the State of Michigan. For instance, you, as the homeowner, have a redemption period of 6 months, or a full year if you're on 12 or more acres. These rights allow you to say in your home for the applicable period of time without having to pay your mortgage.
But remember, this should be your LAST resort. With a foreclosure, not only are you damaging your credit, but you are contributing to the huge inventory of bank owned homes in the market, which in turn is contributing to your neighbors' inability to live in a home that is worth more than they owe. Bottom line, the glut of bank owned homes is a main cause of the vast amount of homeowners who are upside down.
