Steps to Avoid Foreclosure in Real Estate Investment

Foreclosure is one of the major issues you may face in your real estate investment business. There are seven steps to avoid foreclosure. These tips are provided by David Lindahl one of the Real estate Guru’s. He has been in this field for more than a decade. They are:

1.      Refinance

Refinance in one of the easiest way to avoid foreclosure. You can get money from financial associations and lenders who focus in creative financial solutions. It is true that the loan you get will probably have a higher interest rate than a regular loan. But if you have a good amount of equity in your property, the ability to refinance will most likely be a good option that’s available to you. We would be happy to recommend one or more quality mortgage brokers who may be able to help you in your situation.

2.      Bring your mortgage current

I know what you are thinking: “If I could bring my mortgage current, I wouldn’t be in this situation!” That may be true, but have you examined every possible way that you may be able to get the funds? Can you borrow it from friends, family member or co-worker? Can you sell something? Does your employer have any hardship loan programs? Brainstorm with family members or close friends. The more you think about it, the more likely it is that someone will remember or come across a solution.

3.      Create a workout with the lender

The lender does not want to foreclose. That’s because lenders are in the business of having their money at work in loans, and not sitting in a property they have taken back through foreclosure. Not only is that a black mark on the lending institution, but it hurts their financial picture as well. Therefore, in many instances lenders are willing to do “workouts”. What this means is that they are willing to work out the back payments that are owed, until you become current again. A typical workout would be the lender taking the full amount of your back payments and dividing that number by 12 or 24. They would then add that amount to your current payments, until you are paid off. When considering a workout, you’ve got to be able to make that extra payment each month or you will be right back where you started—in the foreclosure process for the second time. At that point, the bank will not look very favorably upon your situation. It’s best to work with a workout specialist, someone who has done workouts before and knows the “ins and outs” of the lending business. We at Results Home Buyers offer workout services free of charge.

4.      Declare bankruptcy

Declaring bankruptcy is viable option to being foreclosed upon, but it should be used only as a last resort. Also, use it only if you know that you will be able to keep up with the future loan payments. Otherwise you’re just postponing the inevitable, and the longer you wait, the less money you will walk away with from your property. A bankruptcy will be reported on your credit report for seven years.

5.      Create shared equity

To create shared equity, you borrow the money from an investor, in order to make up your debts. In return for bringing your loan current, you give the investor a certain percentage of the equity in your property. You are giving up part ownership, in return for keeping part ownership.

6.      Transfer title

This is a form of property sale. It’s called a “subject to” transaction. An investor offers to make up your back payments and take over your property, subject to the existing mortgage. The title of the property goes into the buyer’s name, though the mortgage stays in your name until the loan is paid off. This could take as little as thirty days, or as long as three years.

7.      Sell your property quickly

Once you buy a property, sell it as soon as possible that will help you avoid foreclosure.Keeping a property for more than six months may result in loss. Buy a property make renovation that suits latest trend and sell it for at least 20% profit.

Source: David Lindahl