Alternative To Foreclosure When Cannot Afford Mortgage

Gustan Cho Associates are mortgage brokers licensed in 48 states

This article covers options for homeowners on alternative to foreclosure when homeowners cannot afford mortgage payments:

There are instances when homeowners go through extenuating circumstances and cannot afford mortgage payments. In this article, we will cover the following points:

  • Reason for disruption of income due to economic environment and loss of income
  • Protecting your home and equity

Homeowners facing financial difficulties should not hesitate to contact their lender when they face they are having financial difficulties. Lenders will do everything possible in coming up with a workout.

Contact Your Lender If Facing Financial Difficulties

Is it worth reaching for help if you have financial difficulties?

The real estate and credit collapse of 2008 has skyrocketed bankruptcy filings and foreclosure rates like never before in history.

There were complete industries that got completely eliminated. Real Estate Investors with strip malls with high property taxes got hurt big time. Technology was a major factor in the downturn as well.

Large franchises like Blockbuster Video went out of business. Many did not have to report to work and companies created countless remote job positions where they could work from home. Out of retirement workers were forced back to the workforce.

Hard-working Americans with high-earning positions had to settle with jobs and/or businesses with a substantial income reduction. Millions with stellar credit had their credit deteriorate. This was due to not being able to meet their monthly debt obligations. McMansions were popular but many could no longer afford their homes.

The Great Recession of 2008 was the longest Recession in U.S. History.

Dream of Home Ownership

The dream of homeownership is the number one dream for all Americans in the U.S. Many feared by foreclosing on their homes or filing bankruptcy that they could no longer become homeowners again in their lifetime.

However, homebuyers can qualify for mortgage loans after bankruptcy, foreclosure, deed in lieu of foreclosure, short sale. Gustan Cho Associates is a mortgage company licensed in multiple states with no overlays on government and conventional loans.

Gustan Cho Associates are mortgage bankers and have the ability to broker loans. Gustan Cho Associates has dozens of relationships with non-QM lenders. We have access to non-QM loans and bank statement loans for self-employed borrowers.

NON-QM Loans Require No Waiting Period After Bankruptcy And Foreclosure

Homebuyers can qualify for non-QM loans with no waiting period after the following:

  • Foreclosure
  • Deed In Lieu Of Foreclosure
  • Short Sale
  • 10% to 20% down payment
  • The amount of down payment required depends on borrowers credit scores

Non-QM loans do require a higher down payment than traditional home loans.

Impact Of The Great Recession Of 2008 Today

How the Great Recession of 2008 Affects Today

Many folks today still have not recovered from the decade-old Recession. Foreclosure rates have hit a historical high in late 2011. Most Americans have recovered from the Great Depression of 2008. However, it took years for Americans to recover from the 2008 financial crisis.

The 2008 real estate and credit meltdown skyrocketed unemployment rates to historic highs. Statistics show reflected the unemployment rates were in the double digits. The numbers being reported were not actual figures. This was due to millions who have just given up on trying to find employment. Many homeowners were still lingering in keeping their home mortgage payments afloat.

Foreclosure rates have since stabilized due to new rules and regulations. According to a recent study by Realty Trac, foreclosure rates in many states were experiencing decreases month after month since August 2012. The foreclosure rates have since stabilized since the last financial crisis.

For homeowners who cannot afford mortgage payments and do not see any light at the end of the tunnel, there are alternative options to foreclosures.

Barack Obama, a community organizer from the South Side of Chicago with no business experience, the country was set for a hard road to recovery. After President Donald Trump has taken office, the country was being run like a business.

President Trump has promoted homeownership to historic highs. More and more Americans gained employment. Wages were at historic highs. Homeownership hit a peak in 2018. The America First Agenda was implemented. Foreclosure rates were at historic lows. Mortgage rates were at historic lows and under 3.0%.

Options If You Cannot Afford Mortgage Payments

If you cannot afford mortgage payments and need some relief, there are some alternatives and options for you to consider.

There are many reasons why homeowners cannot afford mortgage payments. It can be due to a job loss or a business shutdown. It can be due to medical reasons or a nasty divorce.

Whatever the reason, the first step you should take is to contact the lender. There are alternatives to foreclosure and a mortgage lender will be the best ally in helping you either keep home through a repayment plan or a deed in lieu of foreclosure or short sale.

The best time to contact the current lender is while you are still current with the mortgage loan payment. Do not blatantly not pay mortgage loan payments without contacting the lender. The mortgage lender does not want the house.

Lenders do not want to foreclose unless absolutely necessary.

Refinancing To Lower Your Monthly Payments

Refinancing so you can lower your monthly mortgage payments may be an option. I can now offer an FHA Streamline with no income verification and no credit scores required for borrowers in Illinois, Florida, Wisconsin, California, and Indiana.

You can have bad credit and recent late payments but not on the mortgage. The only requirement is that you are not late on mortgage payments. Homeowners with a current FHA loa can do an FHA Streamline refinance with no income verification.

There is a minimum six-month seasoning requirement for you to have an FHA Streamline Refinance if you recently purchased a home. Adjustable mortgage rates offer mortgage rates are substantially lower than the 30 year fixed rate mortgage rates.

Loan Modification: Alternative If You Cannot Afford Mortgage

What alternative could there be if you can't afford a mortgage

Another option if cannot afford mortgage payments is to request your current mortgage lender if you qualify for a loan modification. A loan modification is when lenders restructure the current loan. Lenders can make the monthly mortgage payments much more affordable with a loan modification.

The lender can add the past due mortgage payments to the back of the loan. The rates can be lowered at substantially lower rates. The mortgage balance can be discounted if the home is severely underwater.

Selling Your Home Regular Way or Via Short Sale

Another alternative if you cannot afford mortgage payments on your house is to consult with a realtor and see what the home is worth.

Real estate prices have been increasing since the Great Recession of 2008. You might have more equity than you think you have. If your home is worth more than your mortgage and you have substantial equity where it will cover your closing costs and still have equity, you might want to list your home with a realtor.

If the home is worth less than the mortgage balance, then you might want to do a short sale that requires the approval of the current lender. A short sale is when you sell a home below the balance of what you owe to the lender.

Lenders are always willing to entertain a short sale offer. This is because it saves them a lot of time, money, and grief over a regular foreclosure. If the home needs tons of repairs and may take a lot of time in selling it, you might consider doing a deed in lieu of foreclosure.

Homeowners turn in the home in return for the lender foreclosing on the home and having the courts issue a deficiency judgment.

Reorganize Your Debt by Filing Bankruptcy

If you had a salary decrease due to changing jobs or company budget cuts and that has impacted your income where you have too much debts which are impacting paying mortgage payments, you may want to consider filing bankruptcy.

I am not a bankruptcy attorney nor am I qualified to offer bankruptcy advice. Filing Chapter 7 bankruptcy and wipe out all debts and still keep your home if you have little or no equity in your home. If you have tons of equity in your home and assets and have income, you may want to think about filing a Chapter 13 bankruptcy.

Chapter 13 Bankruptcy is a restructuring of your debts over a period of time. The best thing to do is to consult a bankruptcy attorney to weigh your options.

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