Tuesday, April 19, 2011

Prevent Foreclosure: Properly Handling an Underwater Mortgage

The unsteady atmosphere of a bad economy can put down homeowners fearing how low their home value will go. This happens when the home value is lower than the original mortgage amount, and is also known as an "underwater mortgage." This crisis, along with other financial setbacks such as a job loss or a medical emergency, left many people at the verge of foreclosure.  On the other hand, Homeowners can maneuver through the troubling times by looking at the following "dos" and "don'ts."

Don't Buy and Bail                                                                                                                            
Numerous people will honor their mortgage obligations. However, during the recession, various homeowners experiencing a job loss and debt and even real estate professionals profited from "buy and bail" scams. This occurs when the value of the home has dropped, and the borrower makes payments but notices a bargain at another home. This person applies to purchase the new home and may deceive the broker into thinking he/she plans to make the old home a rental. Once the course is complete, the borrower will let the initial home set off to foreclosure.

Don't Ignore Lender's Mail or Calls
Consider it or not, lenders are eager to work with an under pressured homeowner and prefer to keep away from the cost of a foreclosure. The costs to foreclose on a home lender have generally been greater than $50,000, or between 30-60% of the outstanding loan balance. Lenders have frequently had a tough time reaching borrowers though, and borrowers who don't extend may miss a chance to save their homes.

Don't Slack on Payments
Strategic defaulters also wreak havoc. These borrowers have the money to pay their mortgage but don't. Late mortgage payments can destroy credit, whether a strategic defaulter or not and the damage to a credit score doesn't stay too long, when payments are 30 or 60 days behind. Fall behind more than 60 days however, becomes a severe offense, especially when it hits 90 days.

Keep on top of your mortgage payments and search assistance as soon as you think you may fall behind. Seek out help from a reputable third party service like the California Escrow Service. In order to avoid scams and to settle what agreement can be made.

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