I Owe More On My Mortgage Than It’s Worth. What Can I Do?
There is no one-size-fits-all solution when it comes to upside down residential real estate. What works for one person might not make sense for another. The underlying financing involved, the nature of the property, and the objectives of the homeowner all play a big role in what the best solution is.
The baseline option that people ought to consider in deciding what to do with their distressed real estate is a foreclosure. The foreclosure generally takes 7 to 8 months from the first missed payment to loss of ownership of the property. Sometimes it can be longer, but that is typically what you should expect if you are going to stop making your mortgage payment. Generally, not making your mortgage payments is necessary to motivate the mortgage brokers to work with you on the loan. There are some cases where you can get a loan modification or work out some other solution without missing a payment, but that is an exception rather than the rule. If nothing else does work out and foreclosure is in the works, it is important to understand what is going to happen after the foreclosure in terms of deficiency liability, credit, tax issues, and other timing issues that the homeowner has. Overland Park home buyers know the method are often stressful. With the house shortage hitting greater-Kansas City, many potential homebuyers are frustrated. Houses are staying on the market a couple of short days in many cases. Sometimes homes are only on the marketplace for a couple of hours. Unless you’ve got the proper information from mortgage lenders you’ll be at a severe disadvantage. you’ll be outbid or confused about truth costs of that home you’re keen on . Interest rates appear to be the question most are curious about when it involves mortgages. But while knowing the rate of interest is vital , knowing the sort of rate is simply as important. If your rate is variable after a particular period of your time , you’ll be seeing larger costs down the road. You don’t want to enter a mortgage with a rate you won’t be ready to afford someday. On the opposite hand, a variable rate offers flexibility to maneuver in and have reserves for improvements. With the housing shortage in Kansas City, many buyers are desperate. they provide thousands of dollars over selling price only to be outbid. The process can leave potential buyers frustrated and exhausted. But if you accompany the proper mortgage broker you’ll adapt to the challenges of the important estate market. By entering any potential home purchase with the facts about what proportion you’ll borrow, you’ll be before the sport.
Insurance requirements have become such an integral part of the real estate and loan transaction, they must be included in any comprehensive discussion of real estate finance. Every purchase transaction will require title insurance, and every mortgage will require homeowners insurance. In some situations, lenders may also require flood insurance and/or mortgage insurance. Even purchasers of condominiums and townhouses will have other insurance options to consider.
Title insurance was devised to eliminate most of the problems created by abstract attorneys and the abstract opinion. Title insurers examine all the recorded documents pertaining to a specific property to produce an insurance policy that covers the purchaser, the lender, or both, from any defects to the title. Title insurance policies are now fairly uniform, and the insurance companies have the financial resources to defend and compensate their insured.
The owner’s policy insures a purchaser that the title to the property was transferred free of any defects, except those which are listed as exceptions. The settlement agent will obtain and record the documents required in the title commitment. In most real estate transactions, the seller will pay for the owner’s policy. The buyer pays for the lender’s policy and endorsements.
The owner’s policy is valid as long as the ownership of the property remains the same. Transferring ownership of the property to another ownership entity, such as a family trust or a spouse by a quit claim deed may void the title policy. Whenever possible, the owner should use a special warranty deed instead of a quit claim deed to facilitate changes in ownership. This will keep the title insurance intact.
Often referred to as a loan policy, this is issued to mortgage lenders to protect their interest. Typically, lenders require standardized forms be used. The lender’s policy will guarantee the validity of the loan documents, and will follow the assignment of the mortgage or deed of trust when the loan is transferred.
Another option is a short sale. A short sale is a type of negotiation with the lender in terms of getting the house sold for less than what is owed. A short sale involves getting a real estate agent involved or someone to make an offer on the home in order to sell it for less than what is owed. An important thing to remember with a short sale is to make sure you get a clean short sale approval and not a dirty short sale approval.
A deed in lieu of foreclosure is another alternative. It is just what it sounds like. It is deeding the property back to the lender instead of having to go through the foreclosure process. Sometimes the lenders are interested in that and sometimes they are not. Deed in lieu of foreclosure could make sense for the borrowers especially if credit is extremely important to them. Typically, it is not their best option because it means parting ways with the property before it is absolutely necessary.
Loan modification is one other alternative to foreclosure. It rarely presents a great option for the borrower but it could have some benefits to consider as part of the overall strategy.
There are lots of issues to consider and questions to ask when deciding what to do with distressed real estate. There are insurance issues to consider and perhaps rental income that is important to look at for the homeowners. Also, homeowners need to look into the timing of when they move and how that will affect them. It is quite possible that the homeowners could qualify for another home loan before they do anything to affect the distressed real estate and that could make sense as well. These are all options to explore when deciding what to do with distressed real estate.
The bottom line is that if you are going to be parting ways with your distressed real estate, there is foreclosure and then there are the alternatives to foreclosure including short sale, deed in lieu of foreclosure, and loans modification. One or some combination of those options will probably make sense for any given homeowner that needs to get out from under distressed real estate.
Want to know how to build a house cheaply? That’s understandable, given that the median price of erecting a single-family home is $289,415. That’s more than it costs to buy a house that’s already built ($270,000). Yet if your heart is set on building your own house from the ground up, rest assured that there are ways to lower the expenses entailed. Here’s some budget advice on how to build a house cheaply.
1. Build up rather than out
Start saving on the cost by simplifying the design of your home. Face reality: Building a geodesic dome will clearly cost a lot more than constructing a traditional rectangular box. And the cost lowers further if you opt for a two-story house (or three) over a one-story building of equal square footage, since the foundation of the two-story home will be smaller—and the foundation’s the expensive part.
In fact, excavation and foundation work are by far the most expensive aspects of building a home, according to Morgan Franklin of Kentucky’s LexHomeHub.
So anything you can do to tighten the construction footprint translates into money saved on the build cost.
2. Do your homework when hiring a homebuilder to build your house cheaply
It may sound counterintuitive, but in order to build a house cheaply, you need to hire the best homebuilder, even if he costs a bit more.
“An experienced homebuilder isn’t cheap, but he will save you big bucks by knowing how to avoid problems,” Hicks says.
Start by searching for reputable local contractors with experience in building the type of home you want to construct. And make sure to see proof that they’re appropriately licensed, bonded, and insured.
3. Become your own general contractor for your house
If you are willing and able to get more hands-on with the homebuilding process, consider becoming a general contractor—which can save you about 20% on the cost of building a home.
It’s not as far-fetched as you might think.
“I did this for my house,” says Sam Jernigan, an interior designer in Northern California who built her own home. She recommends “The Owner-Builder Book,” by Mark and Elaine Smith, which includes a variety of DIY forms to facilitate the building process.
You’ll want to bring in subcontractors, of course, for the things you aren’t comfortable doing (e.g., bidding on materials and plumbing).
4. Submit paperwork for the build promptly
One of the most costly types of building delays is getting your plans approved. Avoid a budget disaster by seeking the input of the folks who have to sign off on your project early, and ensure you’re filing paperwork in the way they specify, says Jernigan.
5. Save on building materials
Make sure to price out every single item needed to build your house—down to nails and drawer handles—to make sure you can afford what you want.
Another tip: Know that your bottom line will be greatly affected by the type of building materials you use. Personally I found Reliable Roofing, Windows and Siding company to work with very good quality materials for the cheapest price.
On the pricier end is “custom grade”; on the cheap side, look for materials that are labeled “quality grade” and, cheaper still, “builder grade.” But don’t buy on price alone. Builder grade may sound fine, but it’s important to understand the consequences of opting for less durable products. You could end up having to replace a cheap, failing roof on your house sooner than one that cost more initially. As a fail-safe, always opt for grades that offer long-term warranties.
Go to this website if you want to read about how you can make money by being a good trust deed lender.
– Read next: How To Flip A House?
Contact the Arizona real estate professionals at Gunderson, Denton & Peterson, P.C. today!
1930 N Arboleda #201
Mesa, Arizona 85213
40 N Central Ave #1400
Phoenix, AZ 85004
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