Foreclosure: You’re not alone

Foreclosure. The very term strikes fear into the heart of any homeowner. There are fewer now than in 2008 through 2013, but some homeowners still find themselves in this position. If you’re facing such circumstances, first understand that you are not alone.

Many people got into this position by taking advantage of the ridiculously low introductory rates on adjustable rate mortgages (ARMs.) Those loans have reset with consumers facing dramatic increases in the interest rate, and consequently, the monthly payments. Even a reasonable rate like 5% becomes a burden to those who have grown accustomed to the 2 1/2 or 3 percent introductory rates that were prevalent a few years ago.

Or maybe you took advantage of a home equity loan to clean up all that credit card debt. The appraisals for those home equity loans are usually a lot higher than the market value. As long as everything’s going along fine, you can make the payments. But if one of you becomes unable to work or if you decide to go your separate ways, then making the payments becomes a big problem.

Ideally, a short sale coordinated by a real estate professional provides the opportunity to satisfy all the motivated parties — seller, buyer, and lender. The seller wins by liquidating the property before foreclosure proceedings begin. The buyer benefits by securing the property at market value. Finally, the lender benefits by not having to initiate the foreclosure and take the property back.

Foreclosures are very expensive for the lender. After they buy the property back at the sheriff’s sale, they’ll have to keep it insured, pay the taxes (and possibly the back taxes the former owner was unable keep up), pay to have the grass mowed and the snow shoveled, pay to have the property winterized, pay to have the property cleaned up & have the former owners personal property hauled away.

If you think your home may go into foreclosure, contact a local real estate agent in the beginning while you still have time to negotiate with the lender. If you’ve already missed two payments, call your agent today! After the bank has started the foreclosure process, there is very little your agent can do to help you.

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By Kathy Henne

Contact the Kathy Henne Team RE/MAX FINEST by calling (937) 778-3961.