Why are there so many foreclosures? Debt and foreclosure can be one of the most frightening and disruptive events you will ever face. Few situations in life are as stressful and humiliating. Your future is suddenly fraught with uncertainty and upheaval. Your relationships with family and friends can appear strained. If you’re like most, you may not know where to turn or who to trust. Much will depend on your ability to stay calm and learn about your options.
Millions of Americans have gone through the foreclosure process. Much of it has been brought on by overzealous lenders who have lured borrowers into teaser loans containing low front-end payments that later adjust into much higher rates and higher monthly payments. For those that hoped on refinancing to offset the increase, the falling values of homes and the reduction of available equity in them have pushed many homeowners into foreclosure and even bankruptcy.
Debt and Depression—Keeping It Together
Financial trouble is rarely an isolated phenomena; it is often precipitated by the loss of a job, an injury, or divorce. Keep in mind that money trouble is temporary—it almost always passes even though we feel it will last forever. In the meantime, be sensitive to your own emotional state and that of those in your family—and if you find yourself depressed and feeling hopeless—don’t wait to get help. It may be time to contact a healthcare professional to help you through the crisis. Also, if you or your spouse are talking about ending your marriage, take a deep breath and consider the consequences of such an action. It is never a good idea to make life-changing decisions in a time of crisis; instead consider turning to an experienced marriage counselor, therapist, or good friend to help you work through the marital stress caused by the threat of foreclosure. Financial crisis is a time to reach out for professional help as well as emotional support from your friends and family. You might be surprised how many people understand and will be very supportive of your situation.
Foreclosure occurs when you fall behind in your mortgage obligations and your lender proceeds to take legal action to reclaim your property and sell it at a public auction. There are two basic types of foreclosures. Most states, including California, follow the non-judicial foreclosure process. Other states follow the older more traditional process of judicial foreclosure. Additionally, you will find that every state has slightly different rules and procedures so it is strongly advised to check the specific foreclosure rules of your state.
Seller Financed Lending—Alternatives to Bank Lending For 2009
If you need to sell your home in today’s market be prepared for a long, expensive, and painful process. Many sellers are faced with either dropping their price to unacceptable levels or having to rent their house out while they search for cash. However there are alternatives. It’s called private home lending and it can be a very useful alternative in a down market such as ours for both the seller and buyer of real estate.
A large percentage of people throughout the country cannot get approved for bank funding to buy real estate because of their credit situation. Many of these people are still in the market to buy a house, however. People with less then perfect credit are often frustrated with the limitations of apartment living or being renters; as a result, many are willing to pay a higher price just for a chance to get seller financing and improve their quality of life. A savvy property seller who recognizes this opportunity can salvage an unfavorable situation and turn it into a seller’s market.
Sellers who want to both obtain their desired home price and close on the deal quickly should consider seller financing. Seller financing is a powerful tool to remedy real estate sales that otherwise would never get done.
Given the recent collapse of traditional lending, seller financing is readily becoming the alternative path to homeownership for millions of Americans. Seller financing can be a good option for sellers who want to sell but don’t need to receive the whole purchase amount in one lump sum.
Seller financing can also be more flexible and attractive than those offered by banks. The parties are free to negotiate interest rates, down payment, payment ratio between principle and interest or have a lump-sum payment at the end of the term. A seller who has offered the buyer seller financing must be willing to take the risk of default but the upside for the seller is that title can remain with the seller until all the payments are faithfully made—including the big balloon payment at the end. With seller financing, the buyer can enjoy a smaller monthly payment and down payment and obtain approval status at the discretion of the seller rather then a slow-to-lend bank.
A major advantage of seller financing is that the terms of the deal are totally negotiable. This can benefit both parties. With seller financing, you can offer favorable rates and terms to the buyers. For the seller, this means being able to get a much higher price for the home. For many buyers it’s a good way to make a deal happen if the money isn’t there now but will be there in the future, such as in the case of young professionals like doctors and lawyers, who are still paying off student loans, and who are cash poor but will be earning high levels of income in three-to-five years.
Sellers who finance homes usually ask for a five to eight year payment period, often concluding with a balloon payment at the end of the term. The balloon payment is usually made through traditional financing by the buyer.
Once a seller has sold the property through seller financing, the seller can then turn around and sell the secured note to a note buyer for a lump-sum payment. By locating someone willing to buy the note and the stream of payments that come with it, the seller will have ready cash for a down payment for another home or for any other purpose. In this market where price opportunity is great for a buyer, this strategy is meeting with great success.
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