I can no longer afford my house how do I forclose on it?

Question

It is a second home so I won't be homeless. We've had it for sale 9 months and no offers. I cannot afford it anymore, the bank will not work with us b/c up until now we have been paying in full each month trying to keep it current but we cannot any longerr,

The home is near Ocala Florida, it is a very slow market now in FL. I have it listed with a reputable broker and told her we are willing to take any loss. Guess we need to lower the price again rather than look at forclosure, I'm just so desperate at this point.

Answer 1

You are better off selling for a great loss than foreclosure.

Answer 2

A foreclosure is the worst thing you can do! Not only will it hurt your credit score, but it will impact your ability to get a mortgage down the line if you ever decide to sell your primary home. The fist thing I would do is talk to a property manager in your state (you can find one in the yellow pages or on Yahoo) and see if it is worthwhile to rent the property out. If not, or you cannot find a renter, sell it at a loss and eat the rest. You might be able to absorb the loss in the mortgage of your primary home if you have enough equity to take out a loan or line of credit.

Also, try listing it on eBay. Homes sell pretty regularly there. I would imagine that the exclusivity clause with your broker has expired by now as most are 6 months. Try another broker if you can and explain to them that you don't want an exclusive agreement. That way you can seek other brokers if you want.

As a last step, you can contact one of those 'We Buy Houses' people but I caution you that they are trained to get your home at the minimum price possible. Hell, I'd buy it below market value too, if it was worth it.

Answer 3

How is the mortgage structured on this second home? Did you have to put up your existing home for collateral?

Is there PMI on the second home? If so, the bank won't lose out, but the insurance company will.

If you just stop paying, one or the other, or both will come after any & all assets you have. They will have hard time getting them, especially if the second home has a stand alone mortgage, but they will make your like miserable.

If you choose to just stop paying on the second house the bank may become more amialbe to working a deal.

Hopefully you have already dropped the price to break even, or less. If not that is the next step.

Have you considered renting it?

Answer 4

There are certain mortgages that might be helpful for an investor such as yourself, whether you decide to rent it or sell it.

There is an interest only mortgage, which will significantly lower your monthly payment and is in general a good way for an single home investor to go. You pay only the interest on the home for the first 10 years or so, and after that the payment increases to start paying the principle back. These are generally fixed loans for terms of 15, 20, 30, 40, and in certain circumstances, 50 year terms.

Another option, one I generally reserve for my investors with multiple properties that they are renting, is a pay option ARM. The problem with Pay Option ARM's is that there is negative amortization, which means that the principle of the loan will get larger if you pay only the minimum payment. We have programs at Aapex Funding that reduce this Neg Am significantly, and allow for the maximum cash flow from the property. The payments on Pay Options are even lower than on Interest Only loans, and are great for investors and those that plan on selling the property within the next few years.

If you have further concerns or questions, or would like some free help from either me or one of my loan officers, email me or check out the website.

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Aapexfund.com

Answer 5

Foreclosure is not a good option, it will do a lot of damage to your credit. You can take it off the market for a little while, and rent it out, so your tenant can carry it. You can set up a rent to own with somebody, so you charge them a little bit more for rent, but 25% of their rent is put aside to go towards their down payment. You would need a lawyer to draw you up a generic agreement for this.(it shouldn't cost a lot). Or you can discount your house to sell it quick. (probably not the way to go.)
If you do decide to let the bank foreclose, then just stop making payments. After a few months the bank will bash your credit, obtain a writ of foreclosure, and then discount your house. You will then get a bill for what you owe or a cheque for any excess money, but remember the bank will discount your house, they don't like owning real estate.

Answer 6

Yeah, but the bank will start working with you when you miss your first payment. Then they'll start calling.

If you can prove financial/personal hardship, in which you depleted your savings or whatever, the bank might allow you to do a short sale. Basically, the bank will allow you to sell it for less than what you owe without you comming up with the difference at the closing table/escrow.

Also, at this point, you will need to dump your house with an investor or find a real estate agent who knows how to do short sales.

Regards

Answer 7

Try to sell it....Even offer a owner financing deal.
Maybe worth doing and if purchasers default you still have title.
worth a shot. Maybe you over paid. selling it and getting 5 or 10 percent down could relieve alot. Advertise for it too. You may save 6% plus you would be doing the financing so there is extra $$ to re coupe the loss Not to mention a tax benefit. Have to look at listing agreement. may need to explain what your doing and or wait til it expires

Answer 8

Try a friendly foreclosure. You give back the house to the bank in lieu of the title. It could hurt your credit but you no longer need the headache.

Answer 9

Sell it as a loss or rent it out asap. The housing market always comes back, so try to save it if you can.

Answer 10

You should refinance your property for right now so that you will not have a negative credit rating. We can publish your listing on a national basis and take care of the refinance with you.

Joe Bauer
Vice President
Mortgage Service
203-729-8900
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