It seems that although the Government has put a law in place to help Americans keep their home by filing for a loan modification they left one of the most important factors out of the equation, THE LOAN PRINCIPLE! In a loan modification the banks are only looking at adjusting your monthly payments. They are not forgiving any of the principle balance regardless of how much your property value has decreased. In most cases the banks are adding on fees to the principle amount. This is why some borrowers have decided to dismiss the hectic loan modification process and take matters into their own hands.
The "Strategic Default" is a term I came across from an article I was reading on the foreclosure crisis. Apparently some homeowners have decided that it is better to walk away from their homes from a financial viewpoint. The example they gave in this article was amazing and I must admit, that in some cases walking away does make financial sense but what about moral sense?
Let us say you bought a home in 2005 when home prices were moderately high. Now that same home has gone down in value by 40% but your principle balance does not reflect that. Do you still have the obligation to the bank to pay what you originally agreed to pay? The borrowers that walk away say, "no." Their opinion is the real estate market was inflated with dishonest values making their loan principle invalid. Do you agree?
The borrowers that choose to walk away assume some very negative consequences. In most cases their credit profile will show a foreclosure and their scores tank. They are subject to being sued and having judgments against them. They are in most cases forced to become renters. Now their bad credit scores are under scrutiny and evaluated before they can get utilities, insurance and a host of other services. Will walking away really be worth it in the end?
****You May Contact the Specialists for more options concerning your current situation****
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This post is primarily for buyers. A lot of potential buyers in today's market are enticed by the low prices of properties but are unsure of whether to buy a house because of the turbulent economy.
I hope that this blog isn't the first time you've heard of the Making Homes Affordable program, but if not, let me give you a quick run down of what this program is and how it can help you.
The Making Homes Affordable program was introduced by President Obama and commits funds to help homeowners refinance their homes and reduce their monthly payments.
This isn't a small scale program. It is projected to help as many as 3-5 million homeowners. If your monthly house payments are beginning to strain your budget, then now is a good time to see if this program can relive some of that financial stress.
Check out the eligibility page of the Making Homes Affordable program's website. If you aren't eligible for this program, don't worry! There are still refinancing options available to you. You can start this process by calling your lender and inquiring about refinancing options available through individual lenders.
For more information, visit our website, Raleigh Real Estate Group. You can sign up for our 27 day course, delivered via e-mail, plus other goodies like a free eBook. To speak with a real person about options like refinancing, loan modifications, and other foreclosure prevention tools, contact us at (919) 772-1222.
The first thing to do is don't panic. In today's economy everyone is struggling. It's OK to miss a payment.
The second thing to do is evaluate whether this was a one-time hiccup or if you're struggling every month to make that payment. Even if it missing the payment was a one time deal, there are still steps you can take and options open to you to better prepare yourself should you run into harder times.
Make sure to talk to your lender. They hate foreclosures almost as much as homeowners. In today's economy, homeowners have tremendous more leverage over lenders than in the past. Talk with your lender about options to reduce your rate.
Sometimes lender will be difficult. Taking that first step can be difficult. However, at Raleigh Real Estate Group, we have a team of professionals trained in how to deal with lenders and get results. Give us a call at (919) 772-1222, and we can talk with you about some options to help.
The most important thing to do in this situation is to act. It's always better to be prepared now for a situation they may never happen than to wait around while the situation deteriorates. If you want more information about how to stop the foreclosure process, check out our website, where you can get a free eBook and other information about foreclosures.
Welcome to the Official blog of the Raleigh Real Estate Group. From time to time the members of Raleigh Real Estate Group will post here. Topics include information about avoiding foreclosure, dealing with preforeclosure, selling your home, as well as new properties that we are selling.
So whether you are interested in buying a home, selling your home, or just curious about the day-to-day workings of the Raleigh real estate market, then you are in the perfect spot. Stick around for more articles, properties, and exciting information to come!