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Late on Your Mortgage? Understand Your Options

Late on Your Mortgage? Understand Your Options


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Mortgage

Late on Your Mortgage? Understand Your Options

A problem that many Dawson homeowners will face is foreclosure.  While it is not as common as it was during the housing crisis, there are still many people who have found themselves in a much different financial situation than when they first received their mortgage.  A Dawson homeowner that has fallen behind on their mortgage should act quickly. Even if the lender has talked about foreclosure, many homeowners can still sell their house before the process is complete.

Selling While Behind

Selling a Dawson house after getting behind on a mortgage is not an ideal situation to be in. This is why a homeowner should attempt to avoid this situation by selling their home when financial problems start.  However, many Dawson homeowners are reluctant to give up their property and will wait until the last minute to start the process.

A Dawson homeowner who has started to miss payments on their mortgage should look at the fair market value of the home.  If this value is more than what is still owed on the house then the home can be sold to repay the lender. Many Dawson homeowners are lucky enough to be able to sell their house and get out of a mortgage without too many headaches.

The process is not much different than a Dawson homeowner looking to sell their home to upgrade to a larger home.  Homeowners usually list the home, negotiate with buyers, and ultimately sell the home. Unless the house is days from being foreclosed on the homeowner can usually complete a sale without needing their lender to approve the process.

Problems arise if the fair market value of the home is less than what is still owed on the mortgage.  If this happens a homeowner cannot sell their Dawson house in a typical manner. Instead, they are going to need the permission of the lender to participate in a short sale.

Using a Short Sale

A short sale comes into play if the house is no longer worth the amount it was when the homeowner purchased it.  It is a problem because a Dawson buyer will not be able to get a loan for more than what the fair market value of the home is.  So buyers will only be able to make offers that are lower than what the homeowner owes on their current mortgage. The only way a homeowner can accept this offer is to cover the rest of the cost themselves or to have their lender approve a short sale.

Lenders are in a difficult position if a borrower needs to use a short sale.  They do not want to use a foreclosure because they now have a property that they will need to sell.  However, if they accept a short sale they are accepting less money than what was originally borrowed.  Some lenders prefer not to participate in a short sale, but may if foreclosure is imminent.

When asking a lender if a short sale is possible a Dawson homeowner must provide them with a hardship letter.  This letter will state that the homeowner is no longer able to make their monthly mortgage payments. To prove this the homeowner will need to provide monthly income statements and proof of debts.  

Homeowners often choose to use a short sale because it looks better on a credit report versus having the lender foreclose on the house.  The goal for a Dawson homeowner who is behind on their mortgage is to maintain the best credit possible. This allows them to recover faster and make another purchase if needed.

There are a few options when facing foreclosure.  Some lenders will work with borrowers to rectify a situation before they need to sell their house.  If the homeowner is not able to make payments for many months to come they may need to sell the house.  Selling a Dawson house that is worth less than what is owed will need a short sale and this can be a difficult process if the lender refuses the terms.

If you find yourself in this position, our team can help. We have worked with distressed Dawson homeowners, helping to find a solution that makes the most sense. To see how we can help, call us today.

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