How to lower your home loan payments

Avoiding foreclosure means staying in your home by getting back into the good graces of your mortgage lender, or selling your house.

If you want to work things out and stay, you need to make a workout agreement. This consists of contacting your home loan company and discussing your situation with a loss mitigation representative.

They will want documentation of your income. They may send out an inspector to look at the house. They will want to see that you have had a temporary setback and that if they work things out with you, they can expect that you will be able to make the payments in the future.

What they don't want, is to work something out with you, an agreement, and then have you in the same situation two months later.

If your general situation is that you simply cannot afford your house, then you have little or no chance of a workout agreement, and you have to sell your house.

Do you owe more on your home than it is worth?

In the event your house is worth less than your loan balance, you need to do a short sale.

A short sale is a sale where the lender agrees to accept an amount less than what is owed on the mortgage, as full payment.

With a short sale, you get your lender to agree not to go after you for the deficiency.

Say that you owe $250,000 and your house is realistically worth $200,000. Then you can find someone to pay, say, $180,000. They are getting a bargain. And your lender accepts the $180,000 as full payment.

They don't go after you for the $70,000 deficiency.

You are out of it, and best of all you don't have a foreclosure on your credit.

But how do you sell your house if nothing is selling in your area? And how do you sell it quickly, like next week? Let's find out in the next part of this course on the nine day no-fix up FSBO sale.

<- Next ->