Mortgage Relief Formula: What To Do If You Owe More Than Your House Is Worth
Do you owe more than your house is worth? Or are you unable to make your mortgage payments? mortgage relief formula costs including taxes and insurance should be no more than 40% of your take-home income, at worst. Many people are paying more than this. Your mortgage payments may feel like a crushing burden and you probably don’t know where to turn for help. It turns out that a short sale may be the answer for you. I want to focus on doing a short sale – that lets you sell your house, get out from under your mortgage without paying in any cash, and get out from under even if you owe more than your house is worth. Because let’s look at your choices. Choice #1: If you sell your house and you owe more than it is worth, you can pay your own money to make up the loss.
The other night we had a conference call with one of my colleagues who has done hundreds of nine day house sales which let you sell your house from start to finish in nine days even when there are seemingly “no buyers” around. We had a few people on the call who have homes of upwards of $1 million. Many have nothing except the house, which is a liability. But some folks have assets such as paid-for homes and equity in businesses.
The problems with those folks is that often they have a second mortgage and they have assets. As I have explained, folks with high end homes and some assets to protect have special issues. If you have assets then the lenders may pursue judicial foreclosure even in states such as California that generally follow the deed-of-trust non-judicial foreclosure route. In judicial foreclosure, lenders can get a judgment that they can execute against your other assets. Although trustee sales are most common, more and more we will see lenders going to court against borrowers, even years later.
So you can make things a lot better if you will sell your house and get the lender to accept the short sale. The lender loses money. But not nearly as much money as they lose if they get your house back. Getting your house back could cost the mortgage company tens of thousands of dollars. Banks are not that great at holding on to your house. They have to pay for fixing it up because they can’t sell a house in any condition. And they have to hold onto it while it sits on the market. Lenders typically only recover $0.68 per $1 of value on a foreclosure house if they take it back. So why not do a short sale instead? I have learned of the system that lets you sell your house in nine days, with no fix-up, in any market. Because it is a short sale, the lender expects to get clobbered. So they will let you sell your house for 75% – 85% of market value. That means that you can sell your house while your neighbors probably can’t because they feel they must get a higher price than you need to get.
The best way to protect yourself is to do a short sale through a capable intermediary, or learn what you are doing before you start engaging your lender in a discussion. Then you can negotiate a release so the lender will not come after you later. Avoiding foreclosure and negotiating a short sale for the more expensive home is more and more critical. It can affect your financial future for years to come.
Learn more about Obama Mortgage Relief Plan Qualifications.
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