Behind on Payments

Are you behind on payments? Facing an Austin foreclosure? Considering an Austin short sale? Is your home worth less than you owe on it? Are you under water on finances and can’t keep up with your mortgage? Below are my best solutions.

First, try to refinance to lower your payments. However, if your home is worth less than your current loan, it is unlikely that you will qualify for a refinanced mortgage on your home. You could try a loan modification but this is difficult to do on your own. You may want to contact Frameworks, a nonprofit organization that helps home owners negotiate a loan modification. Please remember that filing bankruptcy will not save your home. Unless you catch up your payments, you can still lose the home to foreclosure.

If you cannot make your mortgage payments, you will eventually lose the home to foreclosure. Texas has the fastest foreclosure process of any state. You could lose your home in as little as 60 days. Wouldn’t it be better to sell and save your credit? One way to sell a home with no equity is to offer owner financing. Here’s how it works: You leave your existing mortgage in place. The buyer’s down payment covers closing costs and commissions so that you don’t have to bring money to closing. The buyer takes over your mortgage payments. However, your name is still on the loan. Is this risky? It’s possible the buyer will stop paying. But remember, Texas is the fastest foreclosure state in the nation. Since you are now the lender, you can foreclose on that buyer. One other risk is that your mortgage loan probably has a “due on sale” clause. When you sell the home with owner financing, you are triggering that clause and your mortgage company could demand that the loan be paid in full. But, will they? In reality, the mortgage company doesn’t really care who pays the mortgage as long as it’s paid. If you really need to sell your home, you might be able to save your credit by finding a buyer who might not otherwise qualify for a mortgage loan and would be willing to pay an above market price for your home, just because it comes with financing.

If you are nervous about offering owner financing or you’ve tried offering owner financing with no luck, another option is to sell your home for less than what you owe and simply bring the difference to closing. Interestingly enough, this is what folks used to do when the housing market declined and they needed to sell. It’s been about 25 years since economic times were really tough, but we have been here before. If you could sell your house, pay off the entire mortgage loan and just bring a few thousand to closing, wouldn’t it be worth it to save your credit? Tough times don’t last and some day, you’ll want to buy a home again. Even if you have to borrow money from a relative or other source to make up the difference, this option could be the right solution for you.

If you must sell the home, and it’s worth less than you owe, with that amount too large for you to make up, then your best option might be a short sale. A short sale is when you sell your home for less than the mortgage payoff amount with your lender’s approval. In a short sale, you do NOT bring any money to closing. The lender and end buyer cover all closing costs, including commissions. A short sale occurs when the lender agrees to accept a negotiated payoff amount that is less than what you actually owe. A short sale cannot be negotiated with your lender until your house is under contract with a buyer. Also, your lender will ignore any short sale offer if you are NOT behind on your mortgage payments. A short sale does not damage your credit nearly as much as a bankruptcy or foreclosure. Still, it’s a serious step, and one that should only be taken if you simply cannot keep up with your mortgage payments.

The bottom line is… if you’re struggling to make your mortgage payments, you have options. I can help you with any of these solutions. At no cost to you, we can figure out together what makes the most sense for your situation. If you’re underwater on your mortgage, there’s no reason to suffer. There are solutions. I’m here to throw you a life ring. As you can see, I can offer you multiple solutions, not just one. Also, I have great financial resources to help you with a refinance or loan modification. My short sale team has one of the best track records of success in the Austin area. And, I’ve got a closing team who knows how to handle owner financed sales and short sales. If you would like to talk about your options, there’s no obligation. Just call me at 512-266-2606. I’m happy to help answer your questions so that you can make the right decision for you!

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